Review: BTC.sx

BTC.sxhas been around the Bitcoin space for quite awhile, and at the beginning, they had quite a lot to offer. They provide for high-leverage (as much as 10:1) shorts and longs of Bitcoin/USD pairings on three fairly major exchanges: Bitfinex, Bitstamp, and itBit. They’re backed by Seedcoin, a fairly major venture capital incubator in the space.

And they are a complete and utter disaster for users. I’m going to dispense with my normal formatting and go through why they’re unusable:

1. No API. I assume this is because they’re not targeted at consumers savvy enough to be using their API. The reason why I believe this will become clear in a moment.

2. Absurdly high fees. I’m going to delve into this more clearly in a moment. But their fee schedule is simple enough: 0.48% to open or close a position, plus a 0.3% daily maintenance fee. These fees are charged relative to the leveraged size of the position. Also, while I’m in here, you can’t actually decide your exact leverage: you can only select 2:1, 5:1, or 10:1. If you were going to use 5:1 or 2:1, you could just use Bitfinex instead–which offers shorts, longs, and up to 5:1 leverage, along with LTC pairs–all at lower fee rates and lower daily interest rates. So I’ll examine the 10:1 leverage they offer instead.

Which might literally be the worst gamble I’ve ever seen offered in history. Remember that 0.48% close and open fee (which is already very high?) Well, it’s actually going to end up eating 9.6% of your capital before anything else happens. That’s correct, you’ve lost TEN PERCENT OF YOUR INVESTMENT BEFORE ANYTHING HAPPENS.

Assuming you’re 60% sure of the market’s direction (a miracle), you’re still almost guaranteed to lose money on the trade, because the market has to move 1% in your direction for you to even break even.

Past that, you’re also charged an immense daily maintenance fee equal to 3% of your initial capital. THREE PERCENT! Every 24 hours!

Complete insanity.

BTC.sx is getting an F+ rather than a flat F because even though I would never recommend them to someone who intended to make money trading bitcoin, I do believe they:

1. Are a legitimate, non-scam business

2. Are backed by reputable venture capital

3. Have been around for a long time

With that said though–their fees are way too high for any reasonable person to possibly profit.

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