Coinbase does not calculate the average cost of trading by default. Traders have to consider the total cost of trading to know their average pricing/cost factors.
Let us guide you through the process and know how to calculate the average cost in Coinbase.
What is Coinbase?
Coinbase is a leading cryptocurrency exchange in the world. Using its services, you can buy, sell, stake, and convert cryptocurrencies.
Coinbase has built-in trading platforms to trade cryptocurrencies easily. Users can use the simple Coinbase platform or upgrade to the more advanced Coinbase Pro.
It offers 170 cryptocurrencies for trading through its trading platform and over 500 crypto pairs for exchange. Traders can also earn free Bitcoins using its staking offers.
Unlike its competitors, Coinbase does not restrict cryptocurrency withdrawals. Traders can convert their cryptocurrency balances immediately to fiat cash as and when they like.
Traders can also use its digital wallet services to place their cryptocurrencies there securely. It also now offers NFT trading through its platforms.
What is the Total Cost of Trading in Coinbase?
Before you can calculate the average cost of trading in Coinbase, you should know about the total cost of trading.
The first and most significant part of the trading cost comes in the form of spreads. Coinbase adds its commission of trading to all assets in the form of extended spreads.
It means the buying and selling prices will differ from the actual market prices. The difference between these prices you see is the spread charged by Coinbase or any other trading platform.
Then, you have to pay overnight interest costs for holding investment positions open. The interest rate varies depending on your trading platform and the type of financial asset you traded.
The other significant part of the trading cost comes from non-trading fees. Non-trading fees include currency conversion charges, deposit/withdrawal charges, and taxes paid on your profits.
How to Check Average Cost in Coinbase?
Unfortunately, there is no direct way of knowing your average price of cryptocurrencies or the average cost in Coinbase. However, traders can review their investment performance history (details below).
Let’s review some key elements affecting the average cost of trading cryptocurrencies in Coinbase.
The biggest cost factor of trading cryptocurrencies comes from spreads. Coinbase does not disclose its spread fee rate officially.
The estimated spreads embedded by Coinbase are usually around 0.50%. in some cases, it may end up as high as 2.0% as well.
The actual spread cost will depend on the crypto asset you buy or sell and your chosen trading platform.
Coinbase Commerce Fee
Coinbase charges a flat 1% commerce fee on all cryptocurrency transactions. The fee is reflected in your account balance.
Usually, when you withdraw or convert crypto assets like Bitcoins, the commerce fee will be deducted from your balance.
Coinbase Trading Fee
Coinbase trading fee is based on the maker/taker concept. It means traders pay a small transaction fee on both sides when buying and selling cryptocurrencies.
The maker/taker fees vary by the trading platform and the amount you invest. The taker fee ranges from 0.05% to 0.60% and the maker fee range from 0.0% to 0.40%.
The fees are higher with low investments and decrease as you invest more. For instance, if your investment amount is less than $ 10,000, the taker fee is 0.60%.
When your investment amount increases to $100,000, it reduces to 0.20%, and 0.0% when you invest over $ 400 million.
The Exchange Rate
Traders have to pay a cryptocurrency conversion fee as they pay for Forex transactions.
Coinbase charges a flat 1% cryptocurrency conversion fee on all swaps. Then, it includes another conversion fee depending on the pair you use.
Also, factor in the currency conversion charges for your bank when your base account currency and the digital wallet currency are different.
If you use the staking services from Coinbase, it will cost you around 25%. However, this fee does not charge to all traders.
Another key factor in assessing your average cost of trading in Coinbase is the fund transfer or withdrawal fees.
ACH transfers are free for Coinbase users, while wire transfers incur a charge of $10 and $25 per deposit/withdrawal, respectively.
Once you calculate these costs, you can then know the total cost of trading. The average cost will then be the total cost divided by the number of transactions you place.
Using My Investment Performance Dashboard
If you want an overview of your investments, you can use the “My Investment Performance” dashboard of your online account with Coinbase.
Log in to your online account or mobile app and locate the “assets” tab. Then, select the total balance option and see your investment performance.
You can then change filters to see the total net performance of your portfolio or analyze the performance of a particular asset like Bitcoin.
The “My Investment Performance” dashboard analyzes three main factors:
- Net cash balance available
- Net investments including cash deposits, withdrawals, received, sent, earned a profit, and so on.
- Total return on investment includes profits, interest, asset price changes, etc.
How to Minimize the Average Cost of Trading in Coinbase?
Let’s now analyze a few key factors to minimize the average cost of trading in Coinbase for you.
Use Coinbase Pro
The Coinbase platform comes with a limit of $2,000 deposit daily. This limit will mean more transaction costs if you are a regular trader.
Switching to the Coinbase Pro platform will allow you to increase the account limit. Then, you’ll have access to more crypto assets.
Also, the spreads, margins, and transaction costs will be lower in Coinbase Pro.
Increase Holding Period
Although you’ll incur overnight interest charges, holding your transaction for longer will yield higher returns.
Transaction charges and conversion fees in Coinbase are higher. Minimizing your total cost involves incurring fewer transactions and increasing the amounts rather than volume.
Review Transaction Costs
Plan your transactions before you place an order with Coinbase. Active trading requires placing more transactions than holding investments in cryptocurrencies.
Therefore, review your total transaction costs first and plan accordingly.
Use Cheaper Bank Transfers
Automated clearing house (ACH) transactions take longer but are free of cost with Coinbase. On the other hand, wire transfers will incur transaction charges of $10 and $25 for deposits and withdrawals, respectively.
Using free resources will reduce your non-trading costs significantly.
Review Exchange Costs
A major cost factor is the conversion fee on fiat-crypto exchange transactions. Consider cheaper digital wallets and convert crypto assets to fiat currencies when closing out a transaction only.