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Spread Crypto: everything you need to know to buy and sell without hidden costs
The crypto spread is an element to understand before buying or selling cryptos. , it is essential to know what the Spread , how it impacts each transaction and how to minimize it to optimize its gains during cryptocurrency trading .
Table of contents
What is the crypto spread?
The SPREAD designates the difference between the purchase price and the sale price of a crypto on a platform . This price difference exists in all the financial markets, but it takes on particular importance in the world of cryptos where the liquidity , volatility and the nature of exchanges vary enormously. The Spread Crypto therefore represents the hidden cost that the buyer and seller for each transaction : the larger the SPREAD, the more the price of an asset evolve in the right direction to be profitable.
The Spread is calculated as the difference between the purchase price (ASK) and the sale price (BID) . For example, if the purchase price of Bitcoin is € 50,000 and the sale price is € 49,950, the SPREAD is € 50. So, whenever you buy a crypto like the BTC , you pay the highest price, and when you sell, you receive the lowest price. This margin goes to the platform or market maker S which ensure the liquidity of the market.
Everything you need to know about the Spread: it directly impacts the profitability of each transaction and can represent a hidden cost , especially for beginners.
Why is there a spread on cryptos?
- Market liquidity: The more crypto is exchanged (like Bitcoin ), the more buyers and sellers . A liquid market displays tight spreats . Conversely, a little exchanged crypto or an obscure crypto called will have a gigantic spread because there is little competition between the purchase and sales .
- Volatility of the market: The volatility of the cryptos pushes the market maker to widen the Spread to protect itself from sudden price variations.
- Hidden fees: Some platforms incorporate part of their transaction costs in the Spread rather than display them separately. This can make the Spread less visible for the investor .
Fixed Spread and Variable Spread
- SPREAD Fixed : Spreading remains constant, whatever the liquidity or volatility of the market. very common on large crypto platforms .
- Spread Variable : Spreade fluctuates according to market liquidity and market volatility . This is the case on the majority of exchanges .
How to avoid or reduce Spread in crypto?
To minimize the impact of Spreade when buying or selling cryptos , here are the points to remember:
- Favor platforms with high liquidity (the more volume, the more reduced SPREAD
- Avoid buying or volatility peaks .
- Use Limit (Limit) orders rather than orders to the market to control the purchase or sale price.
- Favor well -established cryptos… such as Bitcoin or Ethereum ethereum which benefit from tight spreats .
A large spread can make an unprofitable transaction low liquidity cryptos . liquid a crypto lower spread
Minimize your Spread: our recommendation for beginners
For European users wishing to have a clear view of the presence of Spread when purchasing , we recommend the Bitvavo platform
- Very competitive costs (maximum 0.25 % on the platform USDC pairs of the Platform ).
- Very rare spreats and explicitly mentioned if necessary, including on the beginner interface while many platforms invoice fees not mentioned high. An example of displaying costs on Bitvavo:
- Over 350 cryptocurrencies available.
- An environment regulated and registered with European financial authorities.
- A simplified interface for beginners.
- The possibility of making free deposits in euros by bank transfer or SEPA.
- Excellent security with partial insurance on funds in the event of a problem.
Bitvavo always displays the current price of the market and, in case of Spread , it is displayed transparently before any transaction . This is a major advantage to avoid hidden costs and control the real cost of each purchase or sale of cryptos .
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✔ Master a decentralized portfolio ( DEFI ) - Learn to manage your assets without intermediary and to interact directly with the blockchain .
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Spread and hidden costs: what beginners must know
The Spread is not the only cost to watch. The platforms apply transaction costs in addition to the Spread . Certain platforms such as a spread which may vary depending on the liquidity and volatility of the market, but also apply fixed or variable costs. Everything you need to know about the SPREAD : you must always compare the purchase price and the sale price of an asset on several platforms to avoid unpleasant surprises.
Spread actors: market makerS, Traders and Platforms
- The market maker create liquidity purchase prices (BID) and sales (ASK) . They take advantage of the Spread to pay themselves.
- Traders and investors are looking to buy at the best purchase price and for sale at the best sale price .
- Platforms can widen the Spread to increase their margin, especially on little liquid cryptos
Summary: Everything you need to know about the crypto spread
- The Spread is the difference between the purchase price and the sale price of a crypto .
- It is influenced by the liquidity , volatility and the pricing policy of the platform .
- A large spread or a gigantic spread can make an unprofitable transaction
- To minimize the impact, favor platforms , use limits orders and compare spreats .
- The SPREAD represents a hidden cost for the investor and must be taken into account in any trading or purchase strategy of cryptos .
By understanding the crypto spread , you become a future trading and you avoid the traps that can reduce the profitability of your investments . more liquid a crypto , the more tight spread buy or sell at a current price close to the reality of the market. Do not hesitate to compare the spreats and choose the platform that offers you the best liquidity and the most transparency .
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Noah
Training engineer, I quickly became interested in the field of finance. Convinced that decentralized finance has a bright future ahead of it, I participate in its democratization by developing Crypternon.
