Cryptocurrencies are no longer a fringe financial instrument for its most ardent supporters. In 2019, digital assets are a prominent investment vehicle couched alongside stocks, bonds, and commodities, bringing both increased participation and higher valuations.
With the collective crypto market cap hovering around $300 billion, investors from all backgrounds with all different experience levels are pursuing digital asset investment. By most accounts, their efforts are being rewarded. The Wall Street Journal reports that 2019’s crypto rally has cryptocurrencies outperforming most other investment vehicles, including stocks, bonds, gold, and oil.
Interestingly, as institutional and individual interest in cryptocurrencies continues to grow, many aren’t looking to invest in cryptocurrencies directly. Instead, they are pursuing derivatives that allow them to bet on the value of crypto without owning the actual assets.
In many ways, a comprehensive derivatives market is indicative of the industry’s growth and maturity in the past several years as it reflects the advanced trading methodologies available to other traders in traditional markets.
Of course, not every platform offers derivatives, so investors looking to take advantage of these burgeoning markets need to find a place to invest.
Here are three derivative digital asset exchanges that are making this possible.
BitMEX is a popular derivative exchange. As a P2P crypto trading platform, its primary investment product tracks the price of Bitcoin against the US dollar; however, users can also establish derivative contracts on several other popular cryptocurrencies.
With BitMEX, users can leverage their Bitcoin with margin trading accounts that lets them open significant positions that are 100x on Bitcoin contracts and 50x on Ethereum. Most BitMEX products operate on three-month contracts, but users can hold their Bitcoin/USD contracts indefinitely.
The platform boasts a daily trading volume in excess of $3 billion, and, to bolster security, the platform keeps all of its funds in cold storage.
Currently, the platform is only available to users in the UK, China, South Korea, and Japan. Nonetheless, a probe by US regulators that’s investigating US users trading activity inspired record withdraws in July that totaled more than $500 million.
First launched in March 2018, ByBit offers a dynamic trading experience for its more than 100,000 users, and it provides broad usability for both novice and experienced traders. Co-founded by Ben Zhou and based in Singapore, ByBit has a global trading environment with users throughout North America, Europe, Russia, Japan, South Korea, and Southeast Asia.
The platform offers derivatives for several of the most prominent cryptocurrencies available today, including Bitcoin, Ether, EOS, and Ripple. Litecoin is expected to join the lineup soon.
Moreover, the platform’s powerful matching engine allows for 100,000 TPS per contract, a significant jump on industry norms, meaning users don’t have to worry about overloads of outages. With trading volume reaching $1 billion this June, that’s an important and distinguishing factor.
ByBit is the first crypto derivative exchange to integrate with TradingView, a social network for traders in various investment markets. Consequently, users can execute trades on ByBit directly from the TradingView platform.
With platform security being top-of-mind for many users, ByBit is prioritizing security and customer service. The platform uses a Hierarchical Deterministic Cold Wallet System to store its assets, and it offers 24/7 customer support to ensure that any pain points are continually addressed.
Like other platforms, ByBit derives revenue from a fee structure imposed on various transactions.
First launched in 2017, Okex is a crypto exchange offering futures and options contracts for Bitcoin. Although it is a year older than ByBit, Okex is still getting started on comprehensive derivative offerings.
The platform has offices in Malta, and their services are widely available in more than 100 countries. While the platform targets both experienced and relatively novice traders, it’s futures features is geared toward veteran traders.
Its products have a varying fee structure that ranges between 0.15% and 0.2% depending on trading volume.
To prioritize security, Okex employes 2-factor authentication, mobile verification, and anti-phishing codes for every communication. Moreover, the platform features a customer support function to enhance the user experience on many fronts.
Ultimately, as investor appetite for cryptocurrency derivatives soars, there is an inherent competition to carve out a niche by offering the most competitive and forward-thinking products possible. Each of these exchanges encapsulates that ethos, and their dynamic platforms are transforming the crypto investment space, making it more accessible and desirable for the burgeoning collection of crypto investors.
Currently, BitMEX appears to be leading the pack, but their recent controversy means that other platforms are positioned to gain significant market share. Therefore, ByBit’s rapidly growing user base and thorough derivatives offering make it an unquestioned rising star in this space. The platform will be pushed ahead by other exchanges like Okex that will ensure a competitive marketplace as the derivatives market continues to develop.
Image by Pete Linforth from Pixabay