The differences in converting Bitcoin to euros (btc to eur) or US dollars (BTC/USD) are quantified in terms of such dimensions as exchange rate volatility, transaction cost, liquidity and regulatory risks. As of November 2023, the average daily trading volume for the BTC/EUR pair on Kraken was 80 million euros, with a spread of 0.12%, while the average daily trading volume of BTC/USD on Coinbase was 150 million US dollars, with a spread of 0.08% (CoinGecko data). Users in the Eurozone have to bear the additional risk of EUR/USD exchange rate volatility (30-day volatility of 4.5%) when converting. For example, if the price of BTC is 30,000 euros (approximately 31,800 US dollars), a 1% drop in EUR/USD will result in an effective loss of 318 US dollars when exchanged.
Comparison of transaction cost: Kraken’s btc to eur transactions charge 0.26% (Maker) and 0.24% (Taker), while the transactions for BTC/USD are a bit more (0.3% and 0.28%). When you exchange one BTC (approximately 30,000 euros), the exchange fee in euros is approximately 78 euros and the exchange fee in US dollars is approximately 84 US dollars (exchange rate 1.06). Euro SEPA deposits through Binance are zero but US dollar SWIFT transfers have a bank handling fee of 15 to 30 US dollars, and delivery time is slowed down by 1 to 3 days. The rate the exchange fee is on decentralized exchanges such as Bitstamp is 1.5% for BTC/EUR, higher than the 1.2% for BTC/USD.
Differential liquidity: The global liquidity of BTC/USD accounts for 62% of the cryptomarket and that of BTC/EUR only 18% (CryptoCompare report). For example, the depth of the order book of the BTC/USD of Coinbase Pro is 1,200 BTC (approximately 36 million US dollars) and BTC/EUR is only 450 BTC (approximately 13.5 million euros) with a slippage risk of 0.05% and 0.1% respectively. Under extreme market conditions (e.g., the 2022 LUNA collapse), the maximum 24-hour trading volume for BTC/USD was 12 billion US dollars, while that for BTC/EUR was just 2.8 billion euros. The lack of liquidity raised the odds of euro exchange delays by 15%.
Tax and regulatory effects: MiCA regulations of the European Union require the btc to eur platform to follow strict KYC (5-minute verification), while US users have to pay 30% capital gains tax (for short-term transactions). Germany charges 26.375% tax on crypto earnings, France 30%, and the United States 37% depending on tax brackets. For example, in Germany, one must pay a tax of 26,375 euros when converting a 100,000 euros profit. However, if the American residents hold it for more than a year, its tax rate will be lowered to 15% (saving 11,375 euros).
Use cases and stability: Eurozone companies will probably accept payments in btc to eur. For instance, in 2023, the volume of euro transactions settled on BTC by Portuguese real estate firms grew 45% over the previous year. However, as it is the world reserve currency, the US dollar accounts for more than 70% in cross-border transactions (SWIFT data), and the Exchange speed of BTC/USD is faster (for example, 2 seconds in Coinbase Instant Exchange). Evidence in history shows that in 2020, while Tesla accepted payments in BTC, settlement was supported only in US dollars. Then, due to suspension of regulation, European users had to convert again (incurring an additional cost of 1.8%).
Risk hedging requirements: If investors have euro assets, to exchange them into btc to eur can reduce exchange exposure, but they have to be willing to bear the risk that the volatility of BTC/EUR (30-day standard deviation 58%) is higher than that of BTC/USD (55%). In the derivatives market, the open contract notional size of BTC/EUR futures on BitMEX is only 120 million euros, significantly less than the 4 billion US dollars of BTC/USD. Insufficient liquidity has led to an increase in hedging costs (annualized margin rate 5.3% vs. 3.8%).
shortly, between btc to eur or BTC/USD depends on the user’s location, amount and intent. For large, low-risk transfers, the US dollar (high liquidity and low cost) is best. The euro is the choice for local requirements and tax optimization, but it is advisable to monitor the EUR/USD exchange rate and the regulatory dynamics (such as the EU DAC8 exchange of tax information).