How much is the Bithumb contract fee

Bithumb's competitive tiered fee structure offers reduced contract fees for high-volume traders, making it an attractive platform for cost-efficient contract trading.

Nov 08, 2024 at 11:04 am

Understanding Contract Fees on Bithumb

Contract trading has gained significant popularity in the cryptocurrency space, allowing traders to speculate on price movements without the need for physical asset ownership. Bithumb, a renowned South Korean cryptocurrency exchange, offers contract trading services to its users, and understanding the associated contract fees is crucial for informed trading decisions.

1. Contract Fee Structure on Bithumb

Bithumb utilizes a maker-taker fee structure for its contract trading, similar to many other cryptocurrency exchanges. This fee structure incentivizes market liquidity by rewarding traders who place orders that add depth to the order book (makers) and charging a slightly higher fee to traders who execute orders that immediately match with existing orders on the book (takers).

• Maker Fees: These fees are charged to traders who place limit orders that add liquidity to the order book and are typically lower than taker fees.
• Taker Fees: Taker fees are charged to traders who place market orders that immediately execute against existing orders on the order book and are generally slightly higher than maker fees.

2. Bithumb Contract Fee Tiers

Bithumb's contract fee structure is tiered based on the user's monthly trading volume. The higher the monthly trading volume, the lower the contract fees. The fee tiers are as follows:

• Tier 1 (VIP 0-1): 0.075% maker fee, 0.1% taker fee
• Tier 2 (VIP 2-3): 0.06% maker fee, 0.09% taker fee
• Tier 3 (VIP 4-5): 0.045% maker fee, 0.075% taker fee
• Tier 4 (VIP 6-7): 0.03% maker fee, 0.06% taker fee
• Tier 5 (VIP 8-9): 0.015% maker fee, 0.045% taker fee

3. Calculating Contract Fees

To calculate the contract fees for a trade, the following formula is used:

Contract Fee = (Contract Size Contract Price Fee Rate) / 365

• Contract Size: The number of contracts being traded.
• Contract Price: The current price of the underlying asset.
• Fee Rate: The applicable maker or taker fee rate based on the user's VIP tier.
• 365: The number of days in a year.

4. Impact of Contract Fees on Profitability

Contract fees are a significant factor that traders should consider when evaluating potential trades. High fees can erode profits and reduce the overall profitability of a trading strategy. Therefore, it is crucial to select the appropriate contract fees to optimize trading outcomes.

5. Bithumb's Competitive Fee Structure

Compared to other major cryptocurrency exchanges, Bithumb's contract fee structure is generally competitive. Through its tiered fee system, Bithumb provides attractive fee rates for high-volume traders, making it a suitable platform for active traders seeking cost-efficient contract trading.

6. Strategies to Reduce Contract Fees

Traders can employ various strategies to reduce contract fees on Bithumb:

• Increase Monthly Trading Volume: Moving up the VIP tiers by increasing monthly trading volume enables traders to access lower contract fee rates.
• Limit Orders vs. Market Orders: Prioritizing limit orders over market orders can minimize contract fees by utilizing the maker fee structure.
• Choose Low-Fee Contracts: Selecting contracts with lower underlying asset prices or lower volatility can result in reduced contract fees.

7. Other Considerations for Contract Fees

In addition to the standard contract fees, traders should be aware of the following:

• Funding Fees: Funding fees are periodic payments made between long and short traders to maintain the equilibrium of the contract price with the underlying asset price.
• Overnight Fees: Overnight fees are charged when holding a position overnight and are typically a small percentage of the contract's value.
• Liquidation Fees: Liquidation fees are incurred when a trader's margin position is liquidated due to insufficient funds.