{"id":68282,"date":"2023-07-25T21:01:47","date_gmt":"2023-07-25T13:01:47","guid":{"rendered":"https:\/\/www.hongkiat.com\/blog\/?p=68282"},"modified":"2023-07-26T21:07:39","modified_gmt":"2023-07-26T13:07:39","slug":"coinbase-fees","status":"publish","type":"post","link":"https:\/\/www.hongkiat.com\/blog\/coinbase-fees\/","title":{"rendered":"How Much Does Coinbase Charge When You Trade (2023)"},"content":{"rendered":"

Coinbase<\/a> provides a user-friendly platform for trading, buying, selling, or converting cryptocurrency<\/a>. However, their website doesn\u2019t clearly specify the charges involved in making these transactions.<\/p>\n

In this article, we\u2019ll walk through a transaction on Coinbase to show you exactly what fees you can expect.<\/p>\n

\"coinbase<\/figure>\n

Why does this matter?<\/h2>\n

Imagine that you invest $500 in cryptocurrency. You see the value of your investment rise to $550 and decide to sell, assuming you\u2019ll make a $50 profit, right? Well, not quite. Since you\u2019re using a platform to trade, like Coinbase, you have to consider the transaction fees or any other associated costs.<\/p>\n

Let\u2019s say the fees amount to $25<\/em> when you buy the crypto, that would bring your total investment to $525<\/em>. Then, when you sell, there\u2019s another $25<\/em> fee, making your total cost $550<\/em>. So, if you sell at $550<\/em>, you\u2019re not actually making any profit at all, you\u2019re merely breaking even.<\/p>\n

That\u2019s why it\u2019s crucial to understand the fees charged by the trading platform. When you include these fees in your cost calculations, you have a clearer idea of the actual selling price you need to set in order to make a profit, and you can more accurately estimate how much that profit might be.<\/p>\n

How much coinbase charge when you trade?<\/h2>\n

We\u2019re going to figure out exactly how much we\u2019re being charged by simulating a trade on the Coinbase mobile app, essentially determining the fees involved in a transaction.<\/p>\n

We\u2019ll use a Coinbase account I have that contains $612.48<\/em> worth of Bitcoin. By tapping the \u2018Convert\u2019<\/strong> button, I can change my Bitcoin into a variety of other currencies, including several stable coins.<\/p>\n

\"coinbase<\/figure>\n

To get an accurate idea of the fees Coinbase charges, we\u2019ll convert the Bitcoin into USDT, which has a one-to-one ratio with the US dollar.<\/p>\n

Once you hit \u2018Preview convert<\/strong>,\u2019 Coinbase will show you an estimation of how much USDT you\u2019ll receive after accounting for the spread and other potential fees. In this instance, the conversion will yield approximately $600.10<\/em>.<\/p>\n

\"preview<\/figure>\n

Let\u2019s simplify this and break it down:<\/p>\n

Before any conversion, the value was $612.48<\/em>. However, after conversion, it was reduced to $600.10<\/em>. It\u2019s important to note that Coinbase didn\u2019t impose any extra fees or taxes. So, where did the difference of $12.38<\/em> (that is, 612.48 \u2013 600.10) go? Well, it was accounted for in the \u201cspread\u201d during the exchange.<\/p>\n

Now, if we convert this scenario into percentages, it becomes more apparent. Imagine that the original amount of $612.48<\/em> is considered 100%<\/em>. After accounting for the spread, the amount was reduced to $600.10<\/em>, which is 98%<\/em> of the original. In other words, the spread amounted to 2%<\/em>, or $12.38<\/em> of the total value.<\/p>\n

What does this mean?<\/h2>\n

Imagine there\u2019s a 2%<\/em> charge each time you make a transaction. In this scenario, even though you think you\u2019re investing $612.48<\/em>, after the fees, you\u2019re actually only investing $600.10<\/em>.<\/p>\n

If you\u2019re buying a cryptocurrency (one that isn\u2019t a stablecoin), you should know that you\u2019re effectively losing 2%<\/em> right off the bat.<\/p>\n

When should I sell to make a profit?<\/h2>\n

To explain, let\u2019s consider that every time you trade, you lose about 2%<\/em> to the spread (the difference between the buy and sell prices). Let\u2019s see how this works in a practical scenario.<\/p>\n

Let\u2019s say you invest $100<\/em> in a cryptocurrency that is currently worth $30<\/em>. Due to the 2%<\/em> spread, your actual investment is $98<\/em>, not $100. So, investing $100<\/em> means that your investment is initially down by 2%<\/em>.<\/p>\n

If the value of the coin increases by 2%<\/em>, going from $30<\/em> to $30.60<\/em>, you\u2019d be breaking even on paper. But remember, there\u2019s likely to be another 2%<\/em> spread when you sell, so it wouldn\u2019t be wise to sell at this point.<\/p>\n

To sell and make a small profit, the coin would need to increase by at least 5%<\/em> from its original price of $30<\/em>.<\/p>\n

So, if the coin\u2019s value goes up by 5%<\/em>, from $30<\/em> to $31.50<\/em>, and with a 2%<\/em> that goes to the spread when buying and selling, here\u2019s how things work out:<\/p>\n