Cryptocurrency Exchange Fees: Cheapest Vs Most Expensive And Why

Twitter icon   • 6 minute read  •  Published 3 months ago  •  Mark Weaden

The cryptocurrency industry is fast-moving, making it difficult to keep up to speed with the latest developments. There is an ever growing number of trading options, crypto exchanges, and exchange platforms available to users. This can make things confusing, particularly to new users trying to navigate their way through the crypto space. 

One that can be complex for new users, is wrapping their head around exchange fees. Exchanges have been known to hide fee structures in the fine print, confusing crypto holders with a blend of fee structures and discounts to make their services look more appealing. 

Intelligent Trading

One thing to be aware of when trading, especially if you’re someone who is making regular trades, is the fees attached. If you trade all the time without considering this, then you could end up losing a lot of money without really realising. 

In order to avoid this, whatever exchange you use, don’t trade too much, unless you’re sure that the fees are very low or even nonexistent. For the most part, it’s far easier to simply choose a coin that has good potential and hold, avoiding the necessity to study fees at all. 

Following monthly trends and buying and selling at the right time will help you to see profit, without taking too many risks. Generally speaking, the longer timeframes you apply between each trade, the less chance you have of losing out. 

There are some that would argue this isn’t the way to trade, when operating within the highly volatile cryptocurrency market. These types are referred to as day traders, who are buying and selling all day, everyday. 

Ultimately, it’s down to the individual. What are your goals with crypto and how much time do you have to spend trading? These are very important questions and will help you to set off on the right path.

What to look out for with cryptocurrency fees

When choosing a cryptocurrency exchange or trading platform, the fees are one of the principal things to assess before making a decision on where to begin buying and selling coins. 

Normally, there is a balance between the price of the coin and the security offered by the exchange. For day traders, it’s worth keeping tabs on the latest exchanges, as they will often offer trades at a lower rate, so that they can entice customers. Traders using well-established exchanges will incur higher transaction rates, because they provide higher levels of security to traders. 

Then there are cryptocurrency exchanges that provide a balanced profile. Highly reputable exchanges that boast a huge community of users aren’t chiefly concerned with attracting new customers, as they know their reputation will carry them alone. In this case—take for example industry leaders like Coinbase and Binance—they can focus entirely on ensuring customers are able to trade swiftly and safely, while offering highly competitive trading fees on all major coins. 

Another factor to consider is the volume of trading. There is no established procedure for pricing Bitcoin trades, or cryptocurrencies in general. Meaning there cannot be a definitive cost that it should be, which means that often prices are based on trading levels at any given time. This adds another layer of inaccuracy to the final trading price. 

What are cryptocurrency exchange fees based on?

Before we dig into the whys, we should say that the fees charged by crypto exchanges are always relatively small in comparison to the value of trades. Nonetheless, be smart, do your homework and find out what the small print says about buying and selling with the coin in question.

Broadly speaking, the average fee incurred when trading at some of the most popular trading platforms will range from 0.1% to 0.2%. Either way, do you do your due diligence and make sure you’re certain of what this figure is before trading. 

Let’s take an example from one of the biggest exchanges in the world, Binance. Traders will be charged 0.1% for buying and selling coins, bypassing the Binance Coin (BNB), which is inplace to make trading even cheaper for users. 

It’s also common to see exchanges listing fees as “maker” and “taker” fees. In essence, traders who place a limit order below the price when buying, or above the price when selling could be charged a maker fee or those that place an order that is executed against an order on the order book will incur a taker fee. This may seem confusing to novice traders, but it’s related to liquidity and whether or not traders are providing two-sided markets, or those trading at prices set by the market makers.

Exchanges often offer deals on fees, depending on how much and how often you’re looking to trade. Furthermore, it depends on what currencies you want to exchange. An example of this would be Coinbase Pro, which is one of the cheapest exchanges if you’re trading crypto with fiat currency. 

Ultimately, it’s down to the individual. What are your trading goals? What kind of trader do you want to be? Look into the exchange and explore the different fees based on your needs and desires. 

Cheapest vs Most Expensive Fees for Trading

Using Bitcoin fees as the variable in this comparison, let’s take a look at the cheapest and most expensive fees for trading. Firstly, let’s note that fees are largely based on the quantities that traders are dealing with.

Cheapest high volume - Binance, Kraken, FTX.

Binance and Kraken are more popular and favor traders who are buying and selling in large quantities. Another point to note is the fact trading may be cheaper with high volume exchanges, but they often have much higher withdrawal fees. FTX may not offer the sheer number of coins as the others, but they do provide very low fees. 

In terms of the most expensive exchanges, there are a variety of factors that influence fees; the country the exchange is based in, the number of coins it offers, the APY (annual percentage yield) offered by the exchange, whether it’s registered as an exchange or brokerage, among many others. Also, the fees registered can incorporate the price in real time, so the user knows exactly how much they will pay. 

Closing thoughts

Customers ultimately must choose an exchange that will cater to their needs. While it’s a safe bet to go with major exchanges that we listed above as the cheapest on the market, there are other factors to consider. One of those is the quality of the support offered. Binance and other big exchanges have been criticized on occasion, due to a lack of support. If something goes wrong with a deposit or trade, you want to ensure you have someone there to help you solve that issue. After all, you’re dealing with your money. Be sure to take all the factors we’ve mentioned in this article into account before depositing.

Author

Mark Weaden

Mark Weaden is a British researcher and crypto enthusiast, living in Barcelona. His work has been published on a variety of leading cryptocurrency sites.

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