What is the cost of trading bitcoin and other cryptocurrencies at K33?

No trading fees!

On K33 Markets, there are no fees for trading, depositing, or withdrawing. What is the catch? 

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The catch is simple, but requires some knowledge of trading terminology to understand. K33 makes money directly from the bid-ask spread, but what does that mean for you as a user?

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The cost of trading bitcoin

When you talk about the price of an object at your local store, you are talking about one specific price. You can buy one or ten objects, and the price will be the same. You can usually also return the product to the store and get your money back.

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However, for bitcoin, there are multiple prices at the same time, which will differ depending on whether you are buying or selling and whether you are making a large or small trade. 

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The best price you can get when selling a small quantity is called the bid price, referring to the highest price someone is bidding for your bitcoin. 

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The best price you can get when buying a small quantity is called the ask price, referring to the lowest price those interested in selling are asking for. 

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There is always a difference between the highest bid and the lowest ask, otherwise a trade wouldn’t happen. This difference is called the bid-ask spread, and can be thought of as the cost of doing a round trade. 

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To make an example: If the bid ask-spread is 3% and you spend 100 USD buying bitcoin, and then sell it right after, you will only be left with 97 USD. If the venue in addition charges a fee of say 0,75% you will lose an additional 1,5% on the round trade, and be left with approximately 95,5 USD. The cost of the trade to the user was 4,5 USD. 

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In other words, what is important to you as a user when trading crypto or other financial assets, is a tight bid-ask spread and as low fees as possible, such that you can keep the maximum amount of money for yourself. 

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This is where K33 shines. Our brokerage model allows us to offer the tightest possible spreads while charging no additional fees. For BTC/USD our spread is typically only around 0.45%, meaning that you would keep 99.55 USD in your pocket when doing a round trade.

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Slippage, the cost of doing large trades

When buying and selling bitcoin or other cryptocurrencies, particularly in local fiat currencies like Norwegian Kroner, there is an extra element to take into account: the slippage.

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Slippage is a measure of how much the price you get worsens when your order size grows. If slippage is high, the effective bid-ask spread will grow and the effective cost will increase. 

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To avoid the extra cost of a larger spread, traders can either split their trade into many small trades over time, or use a venue like K33, with deep liquidity and minimal slippage, keeping the spread stable even for very large orders.

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Always check the price, including spread, fees, and slippage 

When buying or selling bitcoin, many wrongfully focus on finding the venue with the lowest trading fees. 

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Trading fees are, however, only a small part of the full picture. Some popular apps offer zero trading fees, but have 3% or more in bid-ask spread. 

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Furthermore, while some exchanges may have both tight spreads and acceptable fees, the liquidity may be terrible, meaning that you would experience massive slippage when doing a slightly larger trade or even risk not being able to get in or out of the market when you want to. 

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What you should look for is a venue that gives you the maximum amount of bitcoin for your fiat currency when buying and the maximum amount of fiat currency when selling bitcoin, regardless of your order size and time of trade. 

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Finding such a venue may take time, but finding the right one will ensure that you don’t give away too much to the middleman. For Norwegians, kryptopris.no is a convenient benchmarking site that estimates the spread, including fees, FX, and slippage, when buying and selling bitcoin for Norwegian Kroner.

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