Should I buy Bitocoin with eToro?
Is Buying & Selling Too Easy?
The first time you use any exchange, you will discover there are lots of guides and tutorials on how you should store your Bitcoin. The consensus is that once you buy your coin, you should move it to a wallet and not keep it on the exchange. The most common belief is that the exchange might take possession of your funds but on the other hand constantly keeping Bitcoins on a wallet makes the asset less liquid-conversion of Bitcoin into USD directly from wallet requires involvement of other exchanges.
This may appear to be strange, but yet context is vital here. eToro has a much user-friendly interface than most exchanges or CFD brokers, and there are numerous online exchange reviews asserting this, causing novice traders to see eToro as the ideal platform to try out. When these newcomers first trade they’re inevitably going to open positions that don’t go well and end up losing their money.
When it comes to stocks, situations where the price will move more than 10% in one day are very few. In cryptocurrencies, on the other hand, they are not. Given the proper environment, any digital currency can easily plummet 10% or more in just a day. For this to happen to a novice in trading, the fear of losing more money will often give them a powerful urge to sell. It’s possible to do this on eToro in just a split of seconds, to close your position and walk away. But a novice trader would then experience the dread of passing up a major opportunity, then buy back again – usually at a higher cost.
eToro has notoriously high spreads
If you were to buy Bitcoin on an exchange right now, the price would be set by the person ready to sell their Bitcoin for the lowest amount. Let’s say this price is $7000. On this exchange, you’d generally have to pay a fee of about 0.2% for such transaction, and then a second 0.2% fee to sell it, 0.4% altogether; which would be $28. On eToro you pay a fixed price of 0.7% to open Bitcoin trades, which is $49.
|Typical spread||Overnight fee|
*For 1 Unit.
This is only 0.3% more than exchanges, which can still be acceptable but things start getting really disappointing when it concerns other digital currencies where fees may vary between 2% and 5% which many users will deem unacceptable. This further reduces the profitability of trades and the only thing which hustifies such trading cost is eToro’s trading platform which, with so much functionality and features, quite compensates for very high costs.
High Withdrawal Fees
eToro has always charged relatively high withdrawal fees, but for lower amounts, this broker has special cases with lower fees; where for a withdrawal of $20-$200 the fee was $5, for a withdrawal of $200-$500, the fee was $20, and for withdrawal of $500 and above, the fee was $25.
The company has since reversed this, where now the fee for all withdrawals is $25. Of course, If you’re withdrawing large sums of money, you won’t feel the effect of this change. But, on the other hand, if you’re withdrawing with small amounts of a few hundred dollars, this will devour your profits and urge you to deposit and withdraw larger amounts of money to raise profit margins. This situation is bothering, as it encourages new traders’ willingness to invest substantial amounts of money than they should, considering the risks associated with trading cryptocurrencies.
With everything that has been said, you’d probably think we don’t like eToro and are trying to make you avoid it. But this is nothing like that. Being conscious of all the above points, we’re able to bypass the problems caused by them; for example, we tend to avoid Bitcoin Cash trades!
Trading digital currencies are still very new to platforms which only dealt with CFDs beforehand, so irregularities like this are expected. We really expect that eToro will lower their spreads for digital coins as time goes on, and add functionality to dodge the pitfalls we’ve outlined above.
Features like the ability for novice traders to practice with a demo account, and the option to follow/copy other experienced traders are very valuable, and we think it will balance out some of the more annoying features of the platform. Unlike most of the exchanges out there, eToro is a regulated brokerage company, which is another crucial factor for people depositing large amounts.