Cryptocurrency exchanges are living creatures, just like most other online services we use today. The companies powering these solutions have to make necessary changes around the clock in order to guarantee an optimal user experience. Bittrex has introduced some interesting changes in this regard, and its new rules apply to different order types. Overall, these changes are pretty positive, although there will always be some opposition.
Bittrex Shakes up Order Minimums
Volatility has been a big problem in the world of cryptocurrency since day one. Centralized exchanges contribute significantly to price volatility, as they allow for trading on the micro-level. This creates opportunities for people using trading bots to flood order books with small orders in the hopes of triggering a massive buy or sell spike. In a lot of cases, these efforts pay off, causing major price discrepancies for particular currencies. It is not an ideal situation, and there is very little that can be done about it right now.
That hasn’t stopped Bittrex from making changes to try and alleviate some of these concerns. More specifically, the company has communicated several major policy changes which are expected to go into effect next week. The company hopes to continue providing efficient price discovery and the best trading experience. The exchange has quickly overtaken Poloniex as the go-to exchange for altcoins, which means some changes are in order.
The first big change relates to the minimum trade size. As of right now, anyone can place buy or sell orders on Bittrex for 50,000 Satoshi or more. This is a fractional amount, even though 50,000 Satoshi is worth over US$4. At the same time, when people trigger a lot of orders for such small amounts, they can directly influence price charts and market momentum. As a result, the minimum order limit will be increased to 100,000 Satoshi. It makes a lot of sense, although it won’t dissuade trading bot users in the slightest. The company also hinted that there could be a minimum trade quantity requirement on a per market basis.
Additionally, Bittrex says it aims to remove stale orders from its platform altogether. Once an order is older than 28 days, it will be canceled automatically by the exchange. A lot of these orders are placed to fake buy or sell support for specific cryptocurrencies without any expectation that they will ever get filled. This change should result in a slightly more balanced order book for all supported currencies. Then again, nothing prevents manipulators and speculators from putting up the same order every 27 days and keeping it alive that way. Still, it’s an interesting change to keep in mind.
Furthermore, Bittrex will create a minimum tick size. More specifically, the goal is to keep minimum trade sizes within 0.1% of the current price. Right now, this minimum is 1 Satoshi for most markets. That means all markets trading against BTC will only allow order increments of 0.1% of the current market value of that currency. If a coin were trading at 0.2 BTC, the minimum increment would be 0.2002 BTC. It makes a lot of sense, as there is no reason to place small orders on top of one another in increments of 1 Satoshi. Again, it’s another measure to avoid order books from looking skewed and fake.
It is evident Bittrex doesn’t want to get caught up in market manipulation tactics. We see far too much manipulation in all cryptocurrency markets as it is. Bittrex aims to discourage such behavior and it is taking the necessary technical steps to make this venture far less appealing. Whether or not it will have the desired affect remains to be seen. It does appear the company will scrutinize suspicious accounts and even close these accounts if they violate the terms of service.