The volatility in the Bitcoin market has had an impact on the Bitcoin spreads on the FXCM platform, according to a recent report. It has also led to the increase of market requirements on several trading platforms, which may not be good news for retail traders.
In November last year, traders on the FXCM platform were charged an average of 27.4 pips on BTC/USD pair. It increased to 33 pips a month later. However, the Bitcoin spread (which is the difference between the price traders want to sell and the price they are willing to buy) rose to 41.3 pips last month.
Apart from Bitcoin, other cryptocurrencies are recording a similar rise in their respective spreads, and many experts have blamed it on the present market volatility. When there is a high level of price change in the market, it usually takes the spreads wider. However, a redundant market activity keeps the spread normal or even thinner.
In the case of Bitcoin and cryptocurrency spreads, it is now wider on almost all the trading platforms, including FXCM.
The digital assets market gradually returning
Margin requirements are also increasing on trading platforms operated by retail brokers and exchanges.
For instance, FXCM currently charges an average of 0.3 and 1.0 pips for Litecoin and Ethereum transactions respectively. This is also higher than the previous charges last month. But experts are drawing a positive trend from the whole situation. Many are suggesting that the low rate may be an indication that digital-asset markets are gradually coming back.
FXCM has also provided details of its Price Slippage/Improvement Statics for December 2020.
It showed that 12.1 percent of orders were executed with negative slippage while 22.7 percent had positive slippage. However, 65.2 percent were executed at price. FXCM’s statistic for January is expected by mid-February.
Impressive start of the year for Bitcoin
The world’s most valuable cryptocurrency by market capitalization has a highly impressive start at the beginning of the year, rising to $40,000 in value. But the roller coaster ride Bitcoin had did not last very much, as it fell sharply to under $30,000 within few weeks. However, the current price nearly triples its price 6 months ago when it was hovering around the $10,000 resistance level.
The wider spread is caused by the level of activities within the market, as it has become very busy for both retail and institutional investors.