Solving the Spread Issue on DMM Bitcoin
Introduction
DMM Bitcoin is one of Japan’s leading cryptocurrency exchanges, but it is known for its wide spreads (the difference between the buying and selling prices). Wide spreads increase trading costs and can make it difficult to turn a profit. In this article, we will explain the characteristics of DMM Bitcoin’s spreads and provide specific methods to minimize trading costs.
What is a Spread?
A spread is the difference between the bid price (the price to buy a cryptocurrency) and the ask price (the price to sell it). For example, if the bid price for 1 Bitcoin is ¥6,884,500 and the ask price is ¥6,483,000, the spread is ¥401,500 (about 5.83%)】. This difference constitutes the actual trading cost.
Current State of DMM Bitcoin’s Spread
DMM Bitcoin adopts a sales office format, which tends to have wider spreads compared to other exchanges. This can be disadvantageous, especially for traders who engage in short-term or frequent trading.
Methods to Reduce Spread
- Utilize Campaigns
DMM Bitcoin regularly conducts spread reduction campaigns. During these periods, the spread is narrower than usual, so trading during these times can help reduce costs.
- Use Exchange Formats
Other exchanges allow users to trade directly with each other, resulting in narrower spreads. For example, GMO Coin and Bitbank offer such exchange formats with relatively narrow spreads.
- Optimize Trading Timing
Spreads are influenced by market liquidity and trading volume. Trading during high-volume times, especially when Western markets are open, can result in narrower spreads.
- Compare Different Exchanges
Comparing multiple exchanges is also crucial. Research the spreads and fees of various exchanges to find the one that best suits your needs. For instance, Coincheck and Bitbank are known for their relatively narrow spreads.
Advantages and Disadvantages of DMM Bitcoin
Advantages:
- No withdrawal fees: Unlike other exchanges that often charge withdrawal fees, DMM Bitcoin offers free withdrawals.
- Comprehensive support: It provides robust support for beginners, including prompt phone support.
Disadvantages:
- No exchange format: Only offers a sales office format, leading to wider spreads.
- Withdrawal delays: Withdrawal processing can take up to 3 days.
- Wide spreads: Especially during periods of high market volatility, the spreads can widen further.
Conclusion
DMM Bitcoin is a beginner-friendly exchange with many benefits, such as free withdrawal fees and excellent support. However, the wide spreads can increase trading costs. By taking advantage of campaign periods, using exchange formats, optimizing trading timing, and comparing different exchanges, you can reduce costs. It is also important to choose the trading environment that best suits your needs.
Reference Links
Utilize these methods to trade more efficiently and cost-effectively on DMM Bitcoin!
Alternative Solutions to DMM Bitcoin’s Spread Issue
The wide spread on DMM Bitcoin significantly increases trading costs. Here are eight alternative solutions that utilize other exchanges and trading methods to provide a more favorable trading environment.
- Leverage Trading
Using leverage allows you to trade with more significant amounts of money with less capital, thus relatively minimizing the impact of spreads.
- Use of DEX (Decentralized Exchanges)
DEXs like Uniswap and SushiSwap facilitate direct trading between users, often resulting in narrower spreads.
- Execute Arbitrage Trading
By engaging in arbitrage trading, you can take advantage of price differences between multiple exchanges to profit, thereby mitigating the spread’s impact.
- Use Fee-Free Exchanges
Using exchanges that offer free trading fees can help reduce overall costs.
- Utilize Regular Purchase Plans
Investing small amounts regularly can lower the average acquisition cost, thereby smoothing out the impact of spreads.
- Choose Narrow-Spread Assets
Select assets with narrower spreads, such as Ethereum or Ripple, which typically have higher liquidity.
- Negotiate for Bulk Trading
Some exchanges may offer favorable spread conditions for large trades. It’s worth contacting exchanges directly for negotiation.
- Use Emerging Exchanges
Emerging exchanges often offer competitive spreads and fee structures to attract users.
By employing these alternative strategies, you can minimize the impact of spreads and achieve more favorable trading conditions on DMM Bitcoin. Each method has its pros and cons, so it is essential to choose the one that best fits your trading style and objectives. Always stay informed and manage risks carefully when trading!
