Robinhood’s default route for crypto orders costs close to 2% to buy and then sell Bitcoin (BTC). The company’s own disclosures show the charge sits inside the price rather than arriving as a fee.
Delphi Digital co-founder Tommy Shaughnessy surfaced the figure this week. He posted a screenshot showing a Bitcoin spread of $1,426.03, then asked Robinhood’s chief executive to explain it.
The spread is the gap between the price to buy an asset and the price to sell it. That gap is where Robinhood gets paid.
The default setting, called market maker routing, sends crypto orders to an outside trading firm instead of an exchange. Robinhood Crypto receives $0.95 for every $100 of volume routed that way.
That payment sits inside the quoted prices. Buyers pay the higher number and sellers receive the lower one. A round trip therefore costs close to 2% before the market moves.
Shaughnessy’s agent quoted a bid of $75,361.72 against an ask of $76,787.76 on Thursday. That gap came to 1.87%, which he called criminal for an asset this size.
“for anyone doing agentic crypto trades on Robinhood from the jump you are using the default market making approach so you are going to effectively pay 1% to buy and 1% to sell…,” wrote Shaughnessy.
Johann Kerbrat, senior vice president and general manager of crypto at Robinhood pointed to a second option, Smart Exchange Routing, which charges a disclosed fee ranging from 0% to 0.95%.
That fee drops as a trader’s 30-day volume climbs. Kerbrat also rejected a separate claim that customers must sell their coins before moving them off the platform.
“withdrawals to an external wallet don’t require selling first. You can transfer BTC (or any supported crypto asset) directly out of your Robinhood Crypto account,” wrote Kerbrat.
Robinhood also bars agents from transferring, staking, or lending crypto. Two company engineers were charged in an insider trading case tied to Hyperliquid this month.
Robinhood opened agentic trading to crypto earlier this year, letting outside AI agents trade through a separate account. How much traders will pay for that convenience remains unsettled.
The post Trading Bitcoin on Robinhood? Why 2% Spread Has Traders Worried appeared first on BeInCrypto.
Vantora’s innovative model could redefine industrial AI integration, potentially accelerating digital transformation in traditionally slow-moving sectors. The post Vantora raises $100M to build physical AI
Chainlink’s expansion into Arc and MOVA Chain signifies a pivotal shift towards enhanced cross-chain interoperability, boosting institutional blockchain integration. The post Chainlink expands to Arc
Crypto.com has announced the launch of its tokenized stocks service, providing European users access to U.S. equity exposure. This announcement, highlighted in a tweet from
AI errors in military contexts could lead to more cautious decision-making, impacting strategic calculations and reducing conflict likelihood. The post AI hallucination nearly triggers US
Blockchain Bodega is here and you know the vibes. We’re at the intersection of hip-hop culture and web3, exploring this new digital frontier. Who better to guide you through these uncharted lanes than Ock Chain – The Bitcoin Boss and the Consensus Corner Boys?
Ock Chain doesn’t just cook up random details about cryptocurrency; he lives it. Ock’s been deep in the game since Bitcoin was just a baby.
And let’s not forget about the Consensus Corner Boys. They’re our skilled crew of blockchain enthusiasts. They’re here to educate, entertain, and enlighten.
Welcome to Blockchain Bodega!
Copyright © 2023 Blockchain Bodega. All rights reserved.