First Mover: In the Cryptocurrency Markets, No Two Exchanges Are Alike

clicks | 16 days ago | Google AI sentiment -0.20 | comments: discuss | tags: cryptocurrency bitcoin

Article preview (bot search)

(Original link:

First Mover: In the Cryptocurrency Markets, No Two Exchanges Are Alike Jun 26, 2020 at 11:58 UTC (Juanjo_Almeria/Shutterstock) Omkar Godbole First Mover: In the Cryptocurrency Markets, No Two Exchanges Are Alike In the cryptocurrency markets, no two exchanges are alike. Even in major crypto exchanges, trading U.S. dollars for bitcoin can have fairly different order sizes and spreads, according to data compiled by aggregator CryptoCompare. Average order sizes over the past week were quite varied, CryptoCompare found. Orders on Bitstamp averaged $3,424.11, the highest of major dollar to bitcoin (USD/BTC) pair exchanges. ItBit was second to Bitstamp at $2,874.17, with Kraken at $2787.68. Gemini’s average was in the middle of the pack at $1,438.31, followed by Coinbase at $1,113.15. Bitfinex was lowest, with an average order totaling $342.09. The average order of the six exchanges was $1,996.58. You’re reading First Mover , CoinDesk’s daily markets newsletter. Assembled by the CoinDesk Markets Team, First Mover starts your day with the most up-to-date sentiment around crypto markets, which of course never close, putting in context every wild swing in bitcoin and more. We follow the money so you don’t have to. You can subscribe here . Average spreads between the highest bid offer and the lowest ask offer on an exchange order book also varied significantly. Data from CryptoCompare shows a few exchanges have a much larger daily price spread than others. “This is derived from L2 order book data, without fee calculations, on top of this,” said Constantine Tsav, head of research for CryptoCompare. Level 2, or L2, order book data is a term for market information that includes the scope of bid and ask prices for a given asset, in this case USD/BTC. Luxembourg-based Bitstamp, at $5.21 and New York-domiciled Gemini, at $2.38, have the largest average spreads in intraday trading, in this case CryptoCompare used a two-hour interval. Market spread is the gap between the highest bid and the lowest offer on the order book. Thus the gap is the difference between the price traders are willing to sell an asset and others are willing to buy an asset, and vice versa. Average spreads on six large USD/BTC exchange Source: CryptoCompare Chris Thomas, head of institutional trading for Swissquote Bank, doesn’t believe the spread discrepancy between some exchanges is bad – it just depends on the type of trader on the exchange. Traders looking to fill larger bitcoin orders on spot exchanges might choose Bitstamp, based on this data, since it has bigger average orders and wider spreads. Traditionally, traders look for tighter spreads. Source: CryptoCompare “Whereas Bitstamp and Gemini have a relatively wide spread, the four other ones will use this to boast that they have the most liquidity and are ‘the best’ exchanges,” he said. “But they may only be prepared to support these very tight prices in very small sizes – for example, 0.25 or 1 bitcoin on both bid and offers.” “One bitcoin on each side of the bid/ask is okay for retail, but it’s not ideal for institutional.” Of course, traders aren’t just motivated to go to an exchange based solely on average order sizes and spreads. A very fragmented marketplace exists for crypto exchanges in 2020, said Denis Vinokourov, head of research for cryptocurrency broker Bequant. “The tech stack across exchanges is not uniform,” Vinokourov told CoinDesk.“Some exchanges offer high frequency trading connectivity while others don’t, some are more retail focused than others; with segmented geographical focus, numerous legal jurisdictions and various approaches to fiat on-ramps.” Maxime Boonen, CEO of liquidity provider B2C2, says a trader at that size really just needs to decide which exchange has the best fee structure. “Frankly all exchanges are more or less equal, the liquidity of the major cash exchanges is broadly the same for most intents and purposes.” “The fees do vary, that’s important, depending on how much you intend to trade,” he added. The increased use of derivatives in the crypto market is also seeing more professional traders move away from spot trading, Boonen said. “Derivative exchanges are more liquid than cash exchanges,” he said. One of the reasons why order averages might seem so low is that many traders on these exchanges are just buying from time to time to hold (or “HODL”) bitcoin, Boonen told CoinDesk. “You can’t get physical bitcoin from derivatives exchanges, it’s not appropriate for HODLing.” Tweet of the day Bitcoin watch BTC : Price: $9,199 ( BPI ) | 24-Hr High: $9,333 | 24-Hr Low: $9,087 Trend : Bitcoin is flashing red at press time and may be heading for bigger losses in the short term. At press time, the cryptocurrency is trading around $9,200, representing a 0.5% decline on the day, according to CoinDesk’s Bitcoin Price Index . On the daily chart, the cryptocurrency looks to have found acceptance under the 50-candle moving average (MA), a bearish development. Meanwhile,...