LogFAQs > #953118173

I think there is a hidden fee to trading crypto that people might not be aware of. I know for a fact its the case for platforms I've been using in Canada (Wealth Simple, Shakepay) but I don't know if this is true of all platforms

It basically comes from the fact that you aren't making a trade with someone else who wants to sell - you are making a trade with your platform. The platform is selling you the crypto that they have gone out and bought. This is how they make money.

I posted about this before because i was buttmad about being scamaz'd that you might remember. I hadn't really worked through the logic of why it was happening then.

Basically - say Bitcoin is trading at $50k. That's the price everyone is looks at when they talk about the value of Bitcoin. There's orders to buy for $49k and sell at $51k. Ostensibly, there are people meeting in the middle and buying/selling at $50k.

If I see this and place a buy order.... I can buy for $51 or 52k. So presumably, my platform is buying bitcoin from the market for $50k and then selling it to me and keeping the difference - despite Wealthsimple supposedly being "commission free". If I want to sell, I can sell for $48-49k. Here, Wealthsimple buying from me for $48-49k and selling to the market for $50k.

So this means I just cannot buy or sell at current prices - my intermediary is taking a further cut each time for granting me the privilege of being able to make these trades. So this means that if I buy when prices are $50k. I won't be able to break even until prices move to say, $54k, because then my broker will actually let me sell for the price I bought at ($52k)

I think in this case the platform is performing the role of "market maker", which is a critical step in actually allowing trades to happen between different traders. The stock market actually does have this happen too, but it's not your direct broker doing this to you, it's a further step in the chain away from us as retail investors, so it's not really a problem on your individual transactions.

I'm curious - do you guys know if this phenomenon is happening on your crypto platforms? I know there are two separate fees you might get (flat or % based fee your platform might charge) and the actual crypto fee (fee incurred by the cryptocurrency itself any time movement is done). It can be hard to recognize this is happening because it isn't going to show up as a fee - it's just going to be that your order will be fulfilled at a different price than what you were seeing at the time.


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