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How comparing Bitcoin prices can save you money

The price of Bitcoin is very volatile because it reacts to events happening in the cryptocurrency ecosystem, such as partnerships and whale activities. Unfortunately, the volatility can work for or against you.

How? It leads to different prices on different cryptocurrency exchanges. For instance, Bitcoin price on Binance may be $18,000, while on Coinbase, it’s at $17,700.

Why investors are fixed on one exchange

Therefore, when purchasing Bitcoin, Coinbase would be your best bet in this case. However, the price isn’t the only thing that an investor needs to consider; the transaction costs, for example, should be part of the buying plan.

Unfortunately, many Bitcoin investors have been fixed to a single BTC exchange or broker. Largely, this is fueled by the services they get from their preferred trading platform. Also, the lack of time to peruse through brokers and exchanges and the proliferation of scam exchanges have prevented crypto investors from comparing Bitcoin prices in their trading journey.

The barriers notwithstanding, investors end up with a negative return on investment (ROI) by being exposed to high BTC prices. Apart from the costs, some exchanges charge exorbitant fees. Sometimes, the fee schedule may have grey areas, further putting the trader in the dark and jeopardizing their ROI.

Among the common methods used by cryptocurrency exchanges and brokers to determine a virtual currency’s price include, but not limited to:

  •       Service costs. Bitcoin trading platforms charge fees as high as five percent and as low as 0.25 percent. Mostly, market makers pay less while market takers pay higher fees for removing liquidity from the platform.
  •       How often they calculate the price.
  •       The payment method used. Some platforms charge extra for paying using credit cards or bank transfers.

An easy way to compare Bitcoin prices is with the tool.

Profit or loss, the investor is exposed

Interestingly, when an exchange employs these factors, the outcome spells loss or profit for the investor. For instance, a platform may fail to update its prices when the Bitcoin price plummets or rise momentarily.

If it grows and they fail to update, an investor can still buy crypto at the old low prices. However, if it falls and there’s no update, the trader buys at an unnecessarily high price that eats into their profit margin.

Buying Bitcoin is an investment, and you’re in it for the profits. Therefore, comparing crypto prices between established and upcoming exchanges or brokers increases the profit margin by enabling you to buy low and sell high. However, don’t just look at the spot price; consider the trading fees and whether the platform charges depending on the mode of payment.

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