Traders Discover Hidden Costs in Major Crypto Platforms

When executing high-frequency or large-volume trades, investors must navigate not only explicit fees but also significant “hidden price costs.” A recent analysis of trading costs for contracts such as BTCUSDT and ETHUSDT found price variations across six major cryptocurrency exchanges that can significantly impact profits over time. The study examined slippage, market depth, and bid-ask spreads on leading platforms: MEXC, Binance, OKX, Bybit, Bitget, and Gate.io.

Understanding Bid-Ask Spreads and Their Impact

The bid-ask spread represents the difference between the highest price a buyer is willing to pay and the lowest price a seller will accept. A narrower spread indicates lower execution costs, making it a critical factor for liquidity. The analysis revealed that the BTCUSDT spread across the six exchanges is remarkably tight, with both the median and the 95th percentile hovering around 0.008 bps. For a USD 1,000,000 order, this translates to an implied one-way spread cost of approximately USD 0.4 and a round-trip cost of about USD 0.8.

In contrast, the ETHUSDT contract exhibited varying spreads. The median and the 95th percentile spreads on most platforms averaged around 0.02 bps, leading to a one-way cost of about USD 1 and a round-trip cost of approximately USD 2. Notably, on Gate.io, the spread widened to about 0.11 bps, resulting in a one-way cost of approximately USD 5.5 and a round-trip cost of around USD 11, significantly higher than its competitors.

Market Depth and Its Role in Execution Success

Market depth refers to the total resting bid and ask volume available within a specified price range. Greater depth allows for better matching of orders, reducing slippage and improving execution success rates. The analysis found that on BTCUSDT, MEXC aggregates around USD 80 million of two-sided resting orders within the tightest price bands. Other major platforms typically hold around USD 10 million to USD 50 million in the same bands.

When expanding the bands to ±0.1% and ±0.2%, MEXC’s cumulative depth rises sharply to approximately USD 140 million and USD 450 million, respectively. Similar trends were observed with ETHUSDT, where MEXC maintained a notable lead in depth compared to its competitors.

This significant depth means that for a large order, such as 700 BTCUSDT, traders on MEXC can execute their positions with minimal price deviation, while other platforms may require larger price adjustments, increasing costs.

Slippage, the difference between expected and actual execution prices, is another crucial factor. MEXC demonstrated exceptionally low slippage across various order sizes, maintaining near-zero levels for orders of USD 100,000, USD 500,000, and USD 3 million. In contrast, other platforms exhibited rising slippage as order sizes increased, further inflating execution costs.

Comprehensive Assessment of Liquidity

The study emphasized that a single indicator is insufficient for assessing liquidity. MEXC emerged as the only exchange featuring high depth, low slippage, and stable spreads, providing robust evidence of true liquidity.

In stable market conditions, traders can execute limit or market orders with minimal additional costs on MEXC, thanks to its substantial order book depth. During volatile periods, MEXC has shown resilience, controlling slippage within 0.1 basis points even with large market orders, which indicates a strong liquidity buffer.

In conclusion, MEXC stands out as a leader in providing a comprehensive liquidity advantage across key trading dimensions. This attracts sophisticated traders and enhances the platform’s overall liquidity, creating a beneficial cycle. As institutional investors increasingly prioritize execution quality, MEXC positions itself as a preferred destination for traders seeking optimal trading conditions.

This analysis underscores the importance of understanding hidden trading costs across platforms for anyone involved in cryptocurrency trading.