Execution quality is the missing metric in Bitcoin and Ethereum markets

Opinion by: Arthur Azizov, founder of B2 Ventures

Transaction cost analysis (TCA) has long been an important tool in equity trading. With this instrument, traders can see the hidden costs that a transaction carries and minimize the difference between the expected and the actual price.

As crypto matures, it begins to resemble traditional financial markets and functions like other tradable instruments. Crypto transactions also come with costs: fees that investors pay every time they buy or sell crypto.

Yet there is one thing that is clearly not keeping pace with this development. Execution costs for crypto analyzed systematically. Understanding how much it actually costs to execute a deal leaves much to be desired.

This opacity demands the crypto industry urgently adopt transaction cost analysis before it kills market trust.

Invisible costs in the crypto market

To the untrained eye, major crypto pairs can seem liquid; order books are deep, and quoted spreads are competitive. In the end, however, the final execution price can deviate from the expected one due to slippage.

For example, an investor wanted to buy 1 Bitcoin (BTC) for $90,000, but because of the sudden market volatility, the final price was $90,900. The slippage, in this case, would be $900, or 1% of the intended trade amount.

This problem is inherent not only in crypto; it also exists in traditional finance. In equity markets, however, these costs are measured precisely, compared and analyzed with the use of TCA, coupled with best execution.

In contrast, for crypto, the real price of entry or exit is often hard to calculate or predict manually. This is precisely where TCA becomes valuable, as it can allow crypto traders to break down the true cost of execution, knowing exactly bid-ask spreads, market effect and order routing fees.

With TCA tools, crypto transactions can become more transparent, and traders can easily identify the sources of costs associated with executing trades.

Crypto transactions can be hard to price

If it were that easy in real life, however, TCA analysis would already be an integral part of crypto markets. The main issue is that cryptocurrency prices are highly volatile, changing every millisecond and trading happens around the clock. It has a significant influence on trade execution costs, as sometimes investors are simply not on time when making purchases.

The liquidity is low, and the fragmentation, due to the existence of a number of exchanges, remains high. This situation worsens as some platforms may have outages or less available liquidity, which causes even more slippage.

Speaking of costs, things get opaque in crypto. Some costs can often be included quietly within the trade prices, complicating the “total consideration.” It’s difficult to really know the full cost of a trade.

There is an issue of a lack of data as well. A meaningful transaction cost analysis requires standardized data. For example, in equity markets, information is typically available from centralized sources. As cryptocurrencies have a decentralized nature, trading activity is fragmented across numerous exchanges and platforms, making it difficult to aggregate data and perform reliable analysis.

The crypto market also suffers from the absence of regulation and a universal definition of TCA or best execution. As a result, the portfolio performance is highly dependent on external factors such as the speed of a trade or the “health” of the venue and not on the capabilities of an asset manager or investor.

Toward measurable execution

Regulators are beginning to recognize this gap in execution. For example, in 2025, the European Securities and Markets Authority updated its standards, including best execution, to extend beyond equities to include asset classes such as foreign exchange, commodities and, most importantly, crypto.

This does not introduce a transaction cost analysis per se and does not prescribe specific performance indicators, but it’s an important precedent. Execution transparency becomes more mandatory for digital assets.

Although regularization alone cannot solve the problem of invisible trading costs, it still makes investors think more about the need for TCA. If market participants can see how much trading really costs and how these additional fees differ between exchanges, the market will become more efficient.

The dilemma of scattered data and lack of standardization is now being solved with cloud computing and big data analysis that made it significantly easier and more cost-effective to collect large volumes of data and process it. Powered by machine learning, platforms can conduct transaction cost analysis across venues and identify patterns that were previously inaccessible.

The massive use of TCA would help traders reduce costs and increase liquidity. Trading volume flows would gradually move to a place where there are better conditions, which would stimulate competition between the exchanges and assets.

Opinion by: Arthur Azizov, founder of B2 Ventures.