Bitcoin’s meteoric rise to popularity over the past decade has created a tailwind that has driven a significant number of traders into the nascent crypto markets, primarily because of the frequent volatility that Bitcoin and other digital assets incur on a regular basis.
The massive increase in the number of Bitcoin traders in recent times has led to the emergence of a deluge of different platforms that allow traders to utilize margin and other trading tools to enhance their profitability, and fees are one of the main factors that prospective users should look towards when deciding which platform they want to utilize.
Trading fees are fairly straight forward, but there is one other factor – called “bid/ask spread” – that can have a massive impact on trader’s profitability, and this is an imperative factor to be aware of when determining where you want to trade.
How Trading Fees on Top Margin Exchanges Stack Up
Because of the multitude of different platforms available to individuals looking to utilize margin to trade Bitcoin, the fees have decreased significantly in recent times.
While looking towards a few of the most popular platforms in the markets, the fees are strikingly similar for Bitcoin perpetual contracts (XBT), with BitMEX, Deribit, and Bybit all charging a 0.075% taker fee.
Users on Binance’s margin platform have to pay a 0.1% taker fee, but by using Binance’s digital currency BNB as the primary trading pair, users can receive a discount that lowers the taker fee to 0.075%.
Furthermore, Binance also offers different fee tranches based on user’s trading turnover, with the taker fees decreasing slightly as users increase their 30-day BTC trading volume.
PrimeXBT, another popular margin trading platform, currently has the lowest fees of all the aforementioned platforms, offering a flat 0.05% trading fee on all Bitcoin trades. PrimeXBT also offers frequent promotional offers that can help further lower these fees, and recently introduced a new fee structure that allows active traders to receive generous discounts based on their 30-day BTC turnover.
There’s More to the Story: Beware of Bid-Ask Spread
Although trading fees can give you a good idea of what each trade will cost you on the surface, another imperative factor that needs to be considered is the bid/ask spread on these platforms, which can have a significant impact on your bottom-line profitability.
The terms “bid” and “ask” refer to the price quote that indicates the best price that Bitcoin can be bought or sold on a specific platform. The difference between the bid and ask price is known as a spread.
Smaller spreads are typically indicative of higher liquidity, while larger spreads signal that a specific asset – or a specific platform – lacks robust liquidity. Some platforms also use the spread as a way to increase their profitability by acting as market makers, with the spread between the asset’s bid and ask acting as another revenue driver for the platform.
While considering the fees you’re going to pay on a certain platform, you also have to consider what the spread looks like, as a larger spread means that each trade will be slightly less profitable.
It is important to note that spread is not necessarily fixed and can vary significantly on a single platform depending on the market conditions and liquidity surrounding Bitcoin
In spite of this, the spread on cryptocurrency margin exchanges typically remains fairly constant from platform to platform and should be a factor that is considered when determining where you want to trade.
The percentage spread on the following platforms was determined by finding the difference between the bid and ask, dividing that by the price on the specific platform, and multiplying that by 100.
Currently, Binance has the largest spread of all the aforementioned platforms at 0.02%. ByBit and Deribit both have a spread of 0.0066%, while BitMEX’s spread is 0.0067%.
PrimeXBT, which uses over 12 integrated liquidity providers, offers traders the smallest spread, clocking in at 0.0053%.
Trading fees on major margin trading platforms have grown increasingly competitive over the past year, but it is critical that users look beyond this and also factor in the bid ask spread on specific exchanges when determining which platform they want to patronize.
When taking into account the trading fees and spread, PrimeXBT emerges as a clear winner due to its low 0.05% trading fee and small bid ask spread.
Users will also appreciate the clean interface, popular referral program, cutting-edge security, and abundance of features that PrimeXBT offers, which have all been factors behind its massive rise to success over the past year.