Over the last few days, I’ve been analysing the entire interest history of my account. I have done a detailed analysis of 29 instruments, but Ethereum is the most shocking.
I opened my first Ethereum long position of 12 ETH on 01/05/2020. I was charged £0.81 in interest that evening, so the swap rate must have been approximately -0.81 / 12 = -0.0675. Note that this figure is in GBP, whereas the original figure would’ve been specified in USD. However, I have no way of accessing the original USD figure or the exact exchange rate used.
In the 211 days since I opened my first position until everybody’s crypto positions were closed on 27/11/2020, I’ve held at least one Ethereum position for 174 days. During that time, the swap rate has fluctuated, sometimes down but mostly up, relentlessly carrying the swap rate up to -0.155 on 20/11/2020. That is an increase of 129%. However, on 01/05/2020 the ETH price was about $215 and on 20/11/2020 it was about $510, which is about a 137% increase. The swap rate for all instruments seems to constantly fluctuate proportionately to the instrument price, so perhaps this was to be expected. However, I tend to think of the swap as interest on the amount of money I’ve borrowed for leverage. It therefore doesn’t seem fair that the interest increases just because the value of my investment increases. Do all CFD platforms do this, or is it just Trading 212?
Anyway, this is what happened next:
- On 21/11/2020, the swap rate increased by 22.58% to -0.19
- On 22/11/2020, the swap rate increased by 18.42% to -0.225
- On 23/11/2020, the swap rate increased by 95.56% to -0.44
- On 24/11/2020, the swap rate increased by 187.50% to -1.265
- On 25/11/2020, the swap rate increased by 91.3% to -2.42
- On 26/11/2020, the swap rate decreased by 10.95% to -2.155
- On 27/11/2020, all cryptocurrency positions were closed at 01:00 (in the morning) so there were no more interest charges
The price of ETH did go as high as $608 on 23/11/2020, but that doesn’t remotely explain the 1461% increase (15.6x) over the 5 days from 21/11/2020 to 25/11/2020.
So, when I opened my first Ethereum position I was being charged a swap rate of less than 7p (£0.0675) per ETH. When the swap rate hit its peak on 25/11/2020 I was being charged £2.42. That’s an increase of almost 3500%, which is 36x the original rate.