Bitcoin is the king of cryptocurrency. Currently its market cap makes up over 40% of the total cryptocurrency space, sitting at more than US$40 billion. But despite this, it can be a massive pain to actually trade large amounts of bitcoin.
When compared to forex, bitcoin’s trading volume is still almost 700x less, which means markets can move much easier when you are trading in volume with bitcoin.
As a result, you’ll often come across what’s known as slippage on the exchange.
The price you see on an exchange isn’t actually the value of your bitcoin, but rather, it’s simply just the last price that someone bought BTC for. Of course, not everyone wants to sell their bitcoin for the same price, with some people looking for more than others.
This difference is how slippage is created. Slippage is the price difference between the top of the book (the cheapest price you see) and the subsequent prices for BTC after that. When you have relatively low volume across an exchange, this is becomes even more apparent.
You could trade as little 5 BTC and still see slippage of around 1.5% on a good day, and closer to 2% on a bad day.
As you look to buy even more, the slippage can significantly increase. On Australia’s largest exchanges, you can often see slippage of around 15% when you look to buy 100BTC. This means you could end up paying over $160,000 or more extra for the exact same amount of bitcoin.
This is where OTC desks such as HiveEx come in, who match large buyers and large sellers directly, eliminating slippage.
When you buy through an OTC desk, you get quoted the one price, usually around the top of the best order books, sometimes even cheaper and we get you your funds in the same day.
You can get a lot more BTC for your cash.
While you should always seek individual advice on what to invest in, and how much to invest with, it’s important to know how bitcoin works and its use cases to work out its future potential.
Bitcoin is the original cryptocurrency, with the original white paper being released in 2009. Twenty-one million of them will eventually exist, once mining for the final bitcoin has completed in roughly the year 2136.
As a result, this means there is a finite amount of bitcoin, meaning it can be used as a store of value. Think of bitcoin like gold.
BItcoin’s price has worked the same way as gold’s price has worked too - at the beginning when it was easy to mine and get your hands on, the price was relatively low, but as the difficulty gets harder (it roughly doubles in difficulty every 3 years), it became harder to find and the value has gone up.
In 2013, when the first bitcoin bump came, the world was in the grip of the Global Financial Crisis, so many people had lost confidence in traditional markets. So purchasing a finite resource — such as bitcoin — made sense. And the price went up, hitting $1000 since then.
We saw the difficulty double last year, and the price hit even bigger highs at close to $20,000.
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