[Photo: Kraken tweet on free trading]
Is this for real? Am I seeing things right? Has one of the biggest trading platform decided to offer free trading? What does this all mean for Kraken? And is this a permanent thing?
Okay, let me rewind all this and try and keep you and myself calm.
Kraken is one of the major Cryptocurrency exchanges out there. Although it is rated number 70 according to daily trading volume by coinmarketcap, its reputation in the Crypto space has soared for a while now. Its daily trade volume has been estimated to be $8.7 million.
This is a bit on the lower end when compared with the heavyweights of Binance with $4.2 Billion daily trade volume, and Bithumb with $5.3 Billion exchanging in the site pre 24 hours. If you are a person who likes percentages and mathematical analysis, Kraken only does 0.2% of the trade volume of Binance and 1.6% of that of Bithumb.
Kraken joins the list of exchanges offering free trading. But only until January 31st as per their post on the official Kraken blog. In my time zone, today is the 13th of January. So that means I have 18 days to transfer a few of my Ethers to Kraken and start trading at no cost to my profits or losses for that matter.
However, not everything in the deal with Kraken is free.
To start, margin position, open, and rollover fees are reduced to 0.005% until January 31st. The old rates for the same conditions were 0.01%. This is a reduction of fees by 50%. Which is not bad at all if you are a thrifty trader like myself.
We all love that extra penny or dollar in our account, and in this case, we are counting savings in crypto where decimal points and Satoshis make a difference. Secondly, verification of new accounts in Kraken will be delayed and given the lowest priority by their customer service. I believe this is due to the fact that many, if not all exchanges, are experiencing higher than usual new registration requests since late last year.
As Bitcoin and Ether make the news on CNN, BBC,Fox and Wallstreet, more and more people are getting interested with Cryptocurrencies. As a result, new users are turning to the exchanges for access to Cryptocurrencies.
CEX.io for example, shut down new user registrations around Christmas and has not reopened the capability on their website.
Bitfinex only opened new registrations on the 12th of January. With new registrations, came new rules and regulations for new accounts. When you try and register as a new user, you are informed that Bitfinex is for professional traders and the minimum account equity is $10,000. This means Bitfinex is unavailable to many smaller traders. This is understandable since their trading volume per day is at $2 Billion.
Bitfinex is an offshoot of the parent company called iFenix based in Hong Kong. Not much can be found online about iFenix but since it is based in Hong Kong, one can only assume it carries out major financial services.
Binance on the other hand, has been opening and closing new registrations every day. One advantage of Binance is that they do not try to push out the little guys.
Finally, for the new and upgraded Kraken, requests for tier upgrades of existing accounts will have priority over new accounts. This means they are trying to focus attention towards big time traders wishing to upgrade their tier level.
In summary, Kraken has followed the footsteps of Cobinhood albeit briefly. Free trading is something small time traders like myself, wish was available in more exchanges on a permanent basis. I suspect with time, more and more exchanges will see the potential and need for free trading or even lower trading fees. This might happen if the number of online exchanges keep increasing exponentially leading to competition for users.
We all know competition leads to lower prices!
The best solution to free trading would be a decentralized trading platform!
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