Crypto Prop Firms: Getting Funded to Trade Crypto
What Are Crypto Prop Firms?
Crypto prop firms are proprietary trading companies that provide traders with capital to trade cryptocurrency markets in exchange for a share of the profits. Unlike traditional prop firms that focus on forex or equities, crypto prop firms specialize in the unique characteristics of digital asset markets, including their 24/7 trading schedule, higher volatility, and diverse range of trading instruments including spot markets, perpetual futures, and options.
The business model is straightforward: traders pay a fee to participate in an evaluation challenge designed to test their trading skills and risk management abilities. If they pass the challenge, they receive a funded account with the firm's capital. The trader keeps a percentage of the profits they generate, typically between 70% and 90%, while the prop firm retains the remainder as compensation for providing the capital and bearing the risk of loss.
Crypto prop firms have grown significantly in popularity since 2021, driven by the explosive growth of cryptocurrency markets and the increasing demand for leveraged trading opportunities. These firms offer an attractive proposition for skilled traders who lack the capital to trade at their desired size, as well as for traders who want to reduce their personal financial risk by trading with the firm's money instead of their own.
How They Differ from Forex Prop Firms
While the fundamental concept is the same, crypto prop firms differ from their forex counterparts in several important ways. The most obvious difference is the trading hours. Forex markets operate Monday through Friday, while crypto markets never close. This means crypto prop firms must design their challenges and funded accounts to accommodate continuous trading, including weekends and holidays.
Volatility is another key difference. Cryptocurrency markets are significantly more volatile than forex markets. Bitcoin can easily move 5-10% in a single day, while major forex pairs rarely move more than 1-2%. This higher volatility means that crypto prop firms must set different risk parameters and drawdown limits compared to forex firms. The challenges are also designed differently, with wider stop-loss allowances but stricter drawdown rules to account for the volatile nature of crypto markets.
The range of instruments available for trading also differs. While forex prop firms typically offer major, minor, and exotic currency pairs, crypto prop firms provide access to hundreds of cryptocurrency pairs, including both spot markets and derivatives. Many crypto prop firms also offer access to perpetual futures with leverage, which opens up additional trading strategies not available in forex.
Top Crypto Prop Firms
FTMO Crypto: FTMO, one of the most well-known prop firms globally, has expanded into crypto trading. They offer challenges for crypto traders with account sizes ranging from $10,000 to $200,000. FTMO's crypto offering includes access to major cryptocurrencies like Bitcoin, Ethereum, and Solana, with the ability to trade both long and short. Their evaluation process tests consistency, risk management, and profit targets across multiple phases.
MyFundedFX Crypto: MyFundedFX has positioned itself as a crypto-friendly prop firm with competitive profit splits and flexible challenge options. They offer various challenge types including one-step and two-step evaluations, with account sizes from $5,000 to $300,000. Their crypto offering includes access to perpetual futures with leverage up to 20x on major pairs.
FundedNext: FundedNext has gained recognition for its innovative approach to prop trading challenges. They offer both standard and express evaluation paths, with crypto-specific rules that account for the unique characteristics of digital asset markets. Their profit split structure is competitive, and they provide traders with access to a wide range of cryptocurrency pairs and trading instruments.
Challenge Types for Crypto
Crypto prop firms typically offer several types of evaluation challenges, each designed to test different aspects of trading ability. The two-phase challenge is the most common format, requiring traders to hit a profit target while maintaining risk management rules across two separate evaluation phases. This format tests both consistency and the ability to perform under different market conditions.
One-phase challenges offer a faster path to funding by combining both evaluation phases into a single step. These challenges typically have stricter rules and higher profit targets to compensate for the reduced evaluation period. They are ideal for experienced traders who are confident in their ability to perform consistently from the start.
Some firms also offer instant funding options, where traders receive a funded account immediately after passing an initial assessment. While these options provide immediate access to capital, they usually come with lower profit splits and more restrictive trading rules to compensate for the reduced evaluation.
Crypto-Specific Rules
Trading crypto with a prop firm comes with specific rules that differ from forex or futures trading. Weekend holding rules are particularly important, as many crypto prop firms restrict or allow positions to be held over weekends depending on the challenge type and firm. Some firms require all positions to be closed before the weekly market close on Friday, while others allow weekend trading but with adjusted risk parameters.
Volatility handling rules are also unique to crypto prop firms. During periods of extreme volatility, such as major market events or flash crashes, some firms may implement temporary restrictions on position sizes or leverage levels. These rules are designed to protect both the trader and the firm from catastrophic losses during unpredictable market conditions.
Maximum position sizing rules in crypto prop firms are typically expressed as a percentage of the account balance, similar to forex. However, the higher volatility of crypto means that even small position sizes can result in significant dollar swings. Understanding how position sizing works in the context of crypto volatility is essential for successfully passing challenges and managing funded accounts.
Crypto Prop Firm Comparison Table
| Firm | Account Sizes | Profit Split | Challenge Type | Max Drawdown | Profit Target |
|---|---|---|---|---|---|
| FTMO | $10K - $200K | Up to 90% | Two-phase | 10% initial / 5% trailing | 10% / 5% |
| MyFundedFX | $5K - $300K | Up to 85% | One or two-step | 8-12% (varies) | 8-10% |
| FundedNext | $6K - $200K | Up to 90% | Standard / Express | 10% initial / 5% trailing | 10% / 5% |
How to Pass Crypto Challenges
Passing a crypto prop firm challenge requires a combination of skill, discipline, and understanding of crypto market dynamics. The most important factor is risk management. Traders must demonstrate that they can protect capital during volatile market conditions while still achieving the required profit targets. Using conservative position sizing, typically risking no more than 1-2% per trade, is essential for surviving the challenge period.
Patience is equally important. Many traders fail challenges by rushing to hit profit targets, taking excessive risks that eventually lead to blown accounts. The best approach is to trade consistently and methodically, focusing on high-probability setups rather than trying to hit the target quickly. Remember that most challenges have time limits, but there is usually sufficient time to achieve the target through disciplined trading.
Understanding the specific rules of each firm is critical before starting a challenge. Rules regarding maximum drawdown, daily loss limits, weekend holding, and trading hours vary between firms and must be followed precisely. Even a single rule violation can result in immediate disqualification, regardless of overall performance. Study the rules thoroughly and set up your trading plan accordingly.
Pros and Cons of Crypto Prop Firms
The primary advantage of crypto prop firms is access to significant trading capital without risking your own money. This allows skilled traders to generate meaningful income while limiting their personal financial exposure. The structured evaluation process also helps traders develop discipline and consistency, valuable skills that translate to all areas of trading.
However, there are notable disadvantages. The evaluation fees can be expensive, especially if you fail and need to retake the challenge. The rules and restrictions imposed by prop firms can limit trading flexibility and may not suit all trading styles. Additionally, profit splits mean you are not keeping 100% of your trading profits, which can be frustrating for highly profitable traders.