How Does Transaction Fee Variability Impact High-Frequency Trading Strategies in Crypto?

High-frequency trading (HFT) strategies rely on razor-thin profit margins and speed. Variable and high transaction fees can significantly erode or even eliminate these margins, making a strategy unprofitable.

Unpredictable fee spikes introduce execution uncertainty, as a low-fee transaction might be delayed or dropped. HFT firms must dynamically adjust their fee bids or use off-chain solutions to maintain profitability and execution speed.