Cryptocurrencies have managed to secure a position as an emerging asset class even though some gatekeepers on Wall Street are skeptical. Interestingly, the growing popularity of cryptocurrency trading is birthing a parallel derivatives trading market akin to the complementary suite of derivatives surrounding traditional Wall Street assets.
If you are interested in trading cryptocurrency derivatives, you’ll most likely be trading crypto futures or crypto options. The crypto futures also divided into regular Futures and Perpetual Futures. Regular crypto Futures have an expiration whereas Perpetual Futures do not have an expiration date. This piece is a listicle of the top 4 cryptocurrency derivatives trading platform in the market.
Bitmex is unarguably the most popular cryptocurrency derivatives trading platform in the market. Of course, Bitmex is not quite as popular as other cryptocurrency exchanges such as Coinbase and Binance. However, it is the most popular exchange focused exclusively on cryptocurrency derivatives trading.
Bitmex allows traders to place both traditional crypto Futures Contracts and Perpetual Contracts with up to 100X leverage. It uses a dual pricing mechanism to protect traders from an unnecessarily hasty closing of their trades. Order types on Bitmex include Limit Orders, Market Orders, Hidden Orders, Iceberg Order, TP/PL orders. Its order execution methods include FOK, IOC, and GTC.
Bitmex provides traders with a 0.025% Maker fee in rebates, and it charges 0.075% Taker fees. However, it requires a minimum trading deposit of 0.0001BTC before you can begin trading. New traders can take advantage of Bitmex’ Testnet to practice crypto derivatives trading.
The major downside to using Bitmex is that it only allows users to facilitate their trades in Bitcoin. You can only deposit bitcoin, you can only withdraw in Bitcoin, and all its listed cryptocurrencies are paired against BTC. Of course, there’s nothing inherently wrong with its exclusive use of Bitcoin, but traders will probably want more leeway in a market with more than 2,500 cryptocurrencies.
ByBit is relatively younger than Bitmex but it has established itself as a stakeholder in the cryptocurrency derivatives trading market. Founded in 2018, ByBit has recorded an incredible market growth through which it recorded a trading volume of 1 billion and $2 billion worth of trades in late June 2019.
ByBit currently only facilitates Perpetual Contracts with up to 100X leverage but it is working on multiple new product options. Like Bitmex, it also uses a dual pricing mechanism consisting of a Mark Price and Last Trade Price to protect traders from unnecessary liquidation that might be triggered by the lack of liquidity or outright market manipulation.
ByBit provides traders with a wide range of order types such as Limit Orders, Market Orders, Conditional Orders, TP/SL setting with Entry Order, and TS as a Closing Strategy. It also allows traders to execute trades with FOK, IOC, and GTC. ByBit doesn’t require traders to make a minimum deposit before they can start trading and it pays 0.025% rebate as market maker fees while it charges 0.075% as taker fees. It also provides traders with a demo account where they can get started on crypto derivatives with real-time market data buy without risking real money.
Probably the biggest downside to ByBit right now is that it doesn’t have a mobile app for its trading applications, yet. You can only access ByBit from a web browser; of course, the web platform is mobile-friendly, but it takes a bit of work navigating to a web page to place or monitor trades.
It will be a gross injustice to make a list of exchanges that facilitate the trading of crypto derivatives exclusively without including Deribit. The exchange was founded in 2016 as a professional dedicated crypto derivatives trading platform and it has its daily trading office running from Amsterdam.
Deribit differentiates itself by offering cryptocurrency Options in addition to regular crypto Futures and Perpetual Contracts. It also has a Testnet trading feature where traders can learn the ropes of the market.
Deribit also offers traders up to 100X in leverage and it pays a 0.025% rebate for making the market while it charges 0.075% as taker fees. Also, it allows traders to execute trades as FOK, IOC, and GTC.
Deribit’s biggest downside is similar to Bitmex’ downside – it only allows traders to execute trades and transactions in BTC. Its listed contracts are paired against BTC and deposits and withdrawals are in BTC. Besides, it also requires traders to make a 0.001 minimum deposit before they can begin trading.
OKEx is a cryptocurrency exchange that also facilitates the trading of crypto derivatives – it was launched in 2017 as an offshoot of OKCoin. OKex appears to be functionally designed for active day traders or professional traders rather than retail mom and pop crypto traders.
OKEx only has Futures contracts with up to 20X leverage. Traders can place Limit Orders, Market Orders, Conditional Orders, and Trailing Stop Orders. OKEx also deserves commendation with the fact that it combines a Social Loss & Full Account Clawback System in addition to the Insurance Fund that all crypto derivative platforms tend to favour.
However, the fact that orders are only executed with GTC and the 0.03% maker fee and 0.05% taker fee that OKEx charges doesn’t make it attractive to regular everyday traders. In addition, OKEx doesn’t have a trading Testnet or demo account feature to help beginners get started.
The rationale behind the ranking
We listed Bitmex as the top crypto derivatives trading platform because it has the most comprehensive combination of features. Different contract types, order types, low rates, demo trading, contract loss protection, and high leverage.
Bybit also has about the same kind of features as Bitmex and it wouldn’t have been easy to name a clear leader. However, Bybit only has Perpetual Contracts now and it doesn’t have a mobile app yet.
Deribit is ranked third because it has a relatively high 0.001BTC minimum deposit requirement. More so, it only has email support, which might be inadequate for resolving issues with the speed that the cryptocurrency market demands.
OKEX is the last on the list because it is not a core cryptocurrency derivatives trading platform at heart. The fact that it offers crypto derivatives as an afterthought is evident in its low leverage of a mere 20X and the use of GTC as the only order execution method. The lack of a Testnet or demo trading account also makes it somewhat unsuitable for inexperienced traders.