The popularity of cryptocurrencies keeps growing as more people now understand the blockchain network. They offer investors a way to make money that’s different from traditional stock market and financial systems. The cryptocurrency market is still very new, and the people who trade it are still learning the ropes. As a result, many of the nuances of this market have yet to be fully understood. One such nuance is how high fees can affect your crypto profits.
Fees are an important part of any transaction and need to be considered when sending money from one place to another. If you’re not careful about minimizing fees, you could lose money instead of making it.
Here are some tips on how to manage your crypto and make sure high fees don’t eat up your crypto profits:
1. Choose Your Exchange Carefully
The first step to ensuring that high fees won’t eat up your crypto profits is choosing the right exchange. The most popular exchanges have very high transaction fees because they need to cover their costs and earn a profit. For example, some exchanges can charge 1% of the amount traded plus 0.25% more for Bitcoin withdrawals.
If you want to avoid paying high fees when buying or selling cryptocurrencies, then choose an exchange that charges as low as 0.1% for withdrawals or those that offer zero fees on other non-trading transactions. When you choose a crypto exchange that doesn’t charge a lot of fees or commission on trades and withdrawals, you’ll be able to keep most, if not all, of your profits.
However, you should also be keen on the security of the crypto and not just about the fees. That said, you may check out a full report on how to secure your cryptocurrencies in exchanges and wallets even when looking for lower fees.
2. Don’t Withdraw Your Coins Too Often
If you’re trading actively on an exchange and withdrawing funds constantly, it’ll be costly because every transaction carries a fee. The best solution is not to withdraw your coins too often; keep them in your exchange account and only withdraw when needed. This way, you’ll be able to save on fees and avoid paying for each transaction.
A good choice can be to withdraw only once a month instead of weekly or daily. This will minimize the number of transactions you make in your account and the fees you pay. Moreover, when you withdraw a few times, you can take advantage of some exchanges’ free withdrawals for high-frequency traders.
3. Be Careful With Trading Bots
If you want to trade cryptocurrencies automatically, you need to use a bot. These bots are very useful, but they can also be expensive. The best way to avoid paying high fees for a bot is to choose one that has a low subscription fee or is free.
There’s quite a number of free and open-source bots available, so research and find the one that suits your needs. You should also be aware that some bots come with a monthly or annual subscription fee. If you’re going to use a bot, make sure that the fees you pay for it are lower than the fees you’d pay if you’re to trade manually. The bot should also be good enough to make you more profits to cover the fees that you’re paying for it.
4. Use Crypto Debit Cards
The best way to avoid paying high withdrawal fees is by using crypto debit cards. The crypto debit cards work the same way as a regular debit card, but they’re linked to your cryptocurrency account. When you use a crypto debit card, the funds are taken directly from your account to pay for goods and services from vendors who accept cryptocurrency payments.
You will bypass the need to withdraw your cryptocurrencies or convert them to fiat currencies. As a result, there won’t be any need to pay withdrawal fees. The only fee you’ll need to pay is the card’s monthly maintenance fee, which is usually lower than the amount you’d pay for withdrawals.
5. Opt For Decentralized Exchanges
If you want to avoid paying high fees, then opt for decentralized exchanges. Decentralized exchanges are peer-to-peer trading platforms that allow users to trade directly with each other without the need for a centralized third party. Because there’s no middleman, the fees on such exchanges are usually very low or even non-existent.
Most decentralized exchanges always charge a flat fee, like 0.3% and 0.25%, which is lower than other centralized exchanges that charge up to 2%. Using these exchanges can help save a lot of money and keep as much profit as possible.
High fees can eat into your profits, but there are ways to avoid them. Choose an exchange with low fees, don’t withdraw your coins too often, be careful with trading bots, and use crypto debit cards. You can also opt for decentralized exchanges, which usually have very low or no fees. You can keep your profits and make your crypto investment worthwhile by following these tips.