On Friday (March 15th), "Coinbase Pro", Coinbase's platform for experienced/professional traders/investors announced upcoming changes to its "market structure", the most important of which is changes to trading fees. We take a closer look at these changes and see what prominent crypto analyst/trader Alex Krüger has to say about them.
Before we look at the upcoming changes that were announced by Coinbase yesterday, it is worth saying a few words about Coinbase Pro (formerly known as GDX) and how it is different from Coinbase Consumer. Here are the main differences:
- Website Address: Coinbase Pro is at "pro.coinbase.com" whereas Coinbase Consumer is at "coinbase.com".
- Target Audience: Coinbase Pro's target audience is experienced/professional crypto traders/investors, but Coinbase Consumer is focused on regular/mainstream retail investors.
- Range of Availabe Digital Assets: New cryptoassets always become available first on Coinbase Pro, and then some time (days or weeks) later, they become available on Coinbase Consumer.
- Trading Interface: More complex (so, harder to use) on Coinbase Pro, but also more powerful (e.g. you have access to limit and stop orders).
- Trading Fees: For Coinbase Pro, the commissions for buy/sell orders varies depending on how large your orders are (i.e. depends on your total USD trading volume over the trailing 30 day period, which affects which pricing tier applies to you) and whether you are the "taker" (i.e. placing market orders) or "maker" (i.e. placing limit orders), while on Coinbase Consumer, there is a flat 1.49% commission for standard buy/sell orders (but a 3.99% commission applies if you use a credit/debit card).
Now, here is the current fee schedule for Coinbase Pro:
In a blog post published on Friday (March 15th), Coinbase announced several changes to Coinbase Pro, which it says were aimed at optimizing the "market health" of its plaform (more specifically, "to increase liquidity, enable better price discovery for trades, and to make price movements smoother").
Here they are:
- "New fee structure that is designed to increase liquidity by reducing the delta between maker and taker fees"
- "Updated order maximums designed to help protect customers from large price movements"
- "New order increment (“tick”) sizes aimed at improving market structure"
- "Turning off stop market orders"
- "Adding market order protection points"
These changes will become effective on Friday, 22 March 2019, at 18:00 PDT (or Saturday, 23 March 2019, at 01:00 UTC).
And here is the new fee schedule:
Following this announcement, Alex Krüger, a well-known analyst/trader in the crypto community, took to Twitter to comment on these changes, especially the changes to make and taker fees, and to explain why for the smaller traders/investors (i.e. less than $100,000 in "30D USD VOLUME"), it made not much sense to continue using Coinbase Pro, and that it would be better for such people to move to Binance, which now looks even more attractive by comparison.
Alex started by showing a table that highlights how Coinbase Pro has changed the maker and taker fees:
Coinbase Pro raising fees for smaller clients by 33% while lowering fees for larger clients.— Alex Krüger (@krugermacro) March 15, 2019
Reason: "to further optimize the market health of our platform". pic.twitter.com/zS3KMSPCND
Next, he showed the fee schedule for Binance:
Most Coinbase customers fall under the first tier, the one subsidizing larger clients. Now all US exchanges are a rip-off.— Alex Krüger (@krugermacro) March 15, 2019
Compare Coinbase's fees with Binance's. In a rational world, most Coinbase clients would now move to @binance. @cz_binance should be celebrating. pic.twitter.com/TRbIiWuxyk
Then, he explained why eliminating "stop market orders" was a bad idea:
Coinbase is also "turning off" market stop-market orders. Only stop-limits available. Which is absurd. Stop-limits sometimes fail to execute due to slippage.— Alex Krüger (@krugermacro) March 15, 2019
Simple solution: use far off limits, turning stop-limits in de facto stop-market orders.https://t.co/7zsXEMemVZ
When one person asked Alex if this meant that U.S. customers of Coinbase Pro should switch to Binance, Alex replied:
If willing to file additional paperwork, required due to having a foreign account with >$10K, then IMO yes.— Alex Krüger (@krugermacro) March 16, 2019
Featured Image Credit: Photo via Pexels.com (Fee Schedule Tables Courtesy of Coinbase)