Getting in and out of crypto trades was costing investors more than they used to in January, which might not be a healthy sign that digital-asset markets are maturing.
FXCM Group today reported its execution quality metrics for January 2021, which showed the spread on its Bitcoin instrument remains high as traders pay over the top to get their hands on the popular cryptocurrency.
In January, FXCM Group charged its traders on average 53.2 pips on the BTC/USD pairing (the ratio of Bitcoin to the US dollar), up from 33.9 pips, which it last reported in December 2020. The difference between the price at which FXCM traders were willing to buy Bitcoin and the price for which they are willing to sell it, peaked at 61.2 basis points last month.
For the Ethereum and Litecoin instruments, FXCM charged on average 1.9 and 0.4 pips, respectively, which is also higher from the months prior.
FXCM also offers its clients a cryptocurrency basket, named CryptoMajor, which groups five cryptocurrencies all into one tradeable derivative, therefore, allowing traders to collate multiple instruments in one go, without the need to independently manage them. Instead of adding more exposure to a major cryptocurrency, FXCM’s CryptoMajor is made up of Bitcoin, Ripple, Litecoin, Bitcoin Cash, and Ether, giving an equal weighting for each coin in the basket.
Overall, the bid-ask spread on crypto trading has skyrocketed across digital asset exchanges as it usually tends to widen during periods of increased volatility. This has led to much wider spreads than usual while margin requirements have increased on trading platforms run by exchanges and retail brokers.
FXCM Also Published Its Price Improvements/Slippage Statics for January 2021, Which Showed the Following Highlights.
- 62.1% of orders executed at price
- 24.8% of orders executed with positive slippage
- 13.1% of orders executed with negative slippage
Furthermore, the company reported on its execution speed, which is measured from the time a customer’s order is received to the time of filling. The average order execution time was 32 milliseconds in January, compared to 29 in the previous.
According to figures stated in the report, the average spread on the EUR/USD, GBP/USD and AUD/USD pairs were 0.1, 0.3, and 0.2 pips respectively.
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