Why does bitcoin trade at a penny tick size on most major cryptocurrency exchanges?
Imagine this scenario: Bitcoin is trading at $3,500.
An automated trading system then "Penny jumps" the human trader by putting in a small buy order at $3,500.
High-volume bitcoin traders are using systemization algorithms.
Bitcoin behaves unlike any other financial asset many have ever traded.
The result? More high frequency traders with computerized algorithms "Jumping" regular traders.
Conversely, having higher tick sizes would mean better trading advantages to average investors.
This is why small tick sizes are really hard to understand from a trading point of view.
Increasing bitcoin's tick size from one penny to $0.50 or $1 would go a long way in leveling the playing field for human traders.
Why does bitcoin still trade with a penny tick size on most major exchanges?
Bitcoin's Tick Problem
gepubliceerd op Dec 20, 2018
by Coindesk | gepubliceerd op Coinage
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