Increasing price volatility of Bitcoin led to rising in Bitcoin spreads on FXCM. Margin requirements have increased on trading platforms as spreads are growing wider than usual.
What changed on FXCM?
FXCM Group charged traders 33.9 pips on the BTC/USD pair on average. In November 2020, this number was 27.4 pips. The difference between the bid and ask prices for Bitcoin also went up to 41.3 pips. This means that there is a wide difference between the price that users want to buy Bitcoin at versus the price that it is available for sale.
The bid-ask spread for Bitcoin is rising on all digital asset exchanges. This usually happens during periods of heightened volatility. The year 2021 started off on a positive note for the largest cryptocurrency in the world. The asset quadrupled its price in 2020 and reached a new all-time high of $41,000 this year. However, the gain also came with a fall and it eventually tumbled down to less than $30,000. Despite this fall, Bitcoin is still in a great position on a year-on-year basis. Margin requirements have also increased on the trading platforms being run by retail brokers and exchanges.
Are crypto markets maturing?
During this time, FXCM charged 1.0 pips for Ethereum and 0.3 pips for Litecoin which is higher than the previous months. This suggests that the crypto markets may finally be moving towards maturity. The typical spread narrows down as the depth of order books at the brokers keeps increasing. The spread also represents the kind of liquidity available in the market and suggests that an asset can be bought and sold at a stable price.
The firm also published December 2020 price improvements/slippage statistics and said that 65.2% of the orders were executed at price. 22.7% of the orders had a positive slippage while 12.1% of the orders had a negative slippage. In December, its average order execution time increased slightly to 29 milliseconds.