Is it bad for SEO to use a continue reading toggle?
Scrolling is a way of life and you're attempting to fix something that isn't broken
If you research UX scrolling you will find plenty of evidence that for a good user experience and to keep people's attention scrolling is actually a good thing, here's just one article of many you can find online regarding scrolling and user experience:
Myth #3: People don’t scroll
Although people weren’t used to scrolling in the mid-nineties, nowadays it’s absolutely natural to scroll. For a continuous and lengthy content, like an article or a tutorial, scrolling provides even better usability than slicing up the text to several separate screens or pages.
You don’t have to squeeze everything into the top of your homepage or above the fold. To make sure that people will scroll, you need to follow certain design principles and provide content that keeps your visitors interested. Also keep in mind that content above the fold will still get the most attention and is also crucial for users in deciding whether your page is worth reading at all.
How Search Engines Treat Hidden Content
Google and Bing do count SEO of hidden count but it treats it with less importance, a good example of how you can replicate this is copy a long sentence within a hidden element then search for it on Google, it should return the page that you copied that from but none of the keywords will be included in the description with 'BOLD' indicating a solid match.
Long pages are awesome for SEO
It'll be helpful for you to know that there is plenty of case studios that demonstrate that long pages actually rank better than shorter pages. Google has the ability to determine the length of the page and the width, it's unlikely they will consider hidden content. Bottom line is if hiding improves the UX then it's a good trade off for some SEO value, but if it's not much of a positive then hiding that becomes a negative.