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FXCM’s Bitcoin Spreads Rise Slightly Amid Price Volatility

FXCM’s Bitcoin Spreads Rise Slightly Amid Price Volatility

In December, FXCM Group charged its traders on average 33.9 pips on the BTC/USD pairing (the ratio of Bitcoin to the US dollar), up from 27.4 pips it last reported in November 2020. The difference between the price at which FXCM traders were willing to buy Bitcoin and the price for which they are willing to sell it, peaked at 41.3 pips last month.

The bid-ask spread on crypto trading has also skyrocketed across digital asset exchanges as it usually tends to widen during periods of increased volatility. The world’s oldest cryptocurrency had a wild start to 2021. After quadrupling in 2020, bitcoin’s price briefly topped a record $41,000 per coin, but then dropped sharply to below $30,000.

This has led to much wider spreads than usual while margin requirements increased on trading platforms run by exchanges and retail brokers.

For the Ethereum and Litecoin instruments, FXCM charged on average 1.0 and 0.3 pips, respectively, also a touch higher from the months prior. These low rates, however, might be a healthy sign that digital-asset markets are maturing.

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The spread, which typically narrows as a broker’s order book depth increases, is in a sense the transaction cost of making a trade. It essentially represents liquidity – the degree to which an asset can be quickly bought or sold at stable prices.

FXCM also published its price improvements/slippage statics for December 2020, which ‎showed the following highlights‏.‏

  • 65.2% of orders executed at price
  • 22.7% of orders executed with positive slippage
  • 12.1% of orders executed with negative slippage

The company also reported on its execution speed, which is measured from the time a customer’s order is received to the time of filling. The average order execution time was 29 milliseconds in December, compared to 28 in October. Although an important factor in determining where orders are routed, it is only one factor. Some brokers may provide a good speed of execution but fail to provide price improvement or liquidity.

According to figures stated in the report, the average spreads on the ‎EUR/USD, GBP/USD and AUD/USD pairs were 0.2, 0.6, and 0.3 pips respectively.


BlockFi Launches Crypto OTC Desk for Asian and American Traders

BlockFi Launches Crypto OTC Desk for Asian and American Traders

BlockFi, a US-based crypto lending platform, announced on late Wednesday the launch of an over-the-counter (OTC) trading desk that will serve institutions and ultra-high-net-worth clients.

The trading services on the OTC desk will be available around the clock and will primarily target traders in the United States and Asia, two of the most active regions with crypto. 

The desk will act as an execution partner and will offer spot trading, credit capabilities and margin trading products. It will support trading with only three major cryptocurrencies: Bitcoin, Ether and Litecoin.

Commenting on the new service, BlockFi Co-founder and CEO, Zac Prince, said: “Existing institutional clients are already using many of these BlockFi services independently, and have noted the benefits of having a one-stop destination for their digital asset trading and financing needs.”

Indeed, the demand for executing large crypto trades increased with the recently growing institutional demand. Microstrategy, a business intelligence firm, made headlines after buying hundreds of billions of Bitcoins followed by many established companies, including MassMutual, one of the leading American mutual life insurance companies.

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“With institutional interest in digital assets growing rapidly, we’re proud to offer a specialized product to meet their needs and help them participate in an exciting and growing asset class,” Prince added.

Making of a Crypto Conglomerate?

BlockFi launched its service in March 2019, offering loans to those interested in borrowing crypto, starting from $2,000, and up to as much as $100 million, against bitcoin, Ethereum and stablecoins.

Additionally, it offers crypto interest-bearing accounts, offering interests in the crypto deposits of its clients and retail trading services as well. The company is now planning to expand its retail services in many European countries.

“Sophisticated investors are accustomed to full-service OTC capabilities and responsiveness, which are critical to success in a global, round-the-clock market such as digital assets,” David Olsson, BlockFi’s Head of institutional distribution, said.