Here we will introduce you to Bitcoin perpetual swap contracts.
What are Bitcoin perpetual swap contracts and what are the pros and cons?
What are the differences between Bitcoin perpetual swaps and Bitcoin futures?
There are a few different names for different Bitcoin derivatives.
The most common are perpetual swaps and futures. They are very similar but there are a few differences that is very important to understand before you start trading with those contracts.
What is a Bitcoin perpetual swap?
Bitcoin perpetual swaps are derivative contracts. They that let you buy or sell the value of something (that something is Bitcoin but is usually called an “underlying asset”).
There are several advantages with perpetual swap contracts:
- There is no expiry date (You can hold it as long as you want as you as you dont get liquidated)
- The underlying asset is never traded (No custody issues)
- It is very easy to short, even with leverage
Bitcoin Perpetual Swap Contracts VS Futures
Bitcoin perpetual swaps and Bitcoin futures are quite similar in their nature. Both are crypto derivative trading contracts.
Bitcoin future contracts obligate the parties to transact Bitcoin at a predetermined future date and price.
With Bitcoin futures, the buyer must purchase or the seller must sell Bitcoin at the set price, regardless of the current market price at the expiration date.
Bitcoin perpetual swaps have no expiration date. Also, they are usually traded closer to the spot price.
Bitcoin Perpetual Swap Contracts and Risks
Bitcoin perpetual swap trading, as all other instruments, carry their own set of risks that traders should be aware of. The most significant of those are:
- Pair’s value movement might go against investor’s predictions (no matter if fiat or crypto).
- Possibility of harmful market manipulation by a platform
- Crypto-only pairs even more volatile than against fiat
Where to Trade Bitcon Swaps and Futures
In this guide, we go over the well-known crypto trading platform that offers both types of contracts, BitMEX.
BitMEX is one of the rare cases where futures and swaps instruments are available when trading cryptocurrencies. The company offers bitcoin, Cardano, Bitcoin Cash, EOS, Ethereum, Litecoin, and Ripple for both types of trading contracts. You can check out the order form in a snapshot below.
You can use 100x leverage for BTC. Others have their own rates that range from 20x to 50x, with ETH being largest.
What differentiates BitMEX from other platforms are also rebate fees for makers. Bitcoin and crypto trading fees are almost always given as maker and taker fees.
With BitMEX, you can get -0.025% for BTC and -0.050% for other coins. Taker orders carry 0.050% fees for bitcoin and 0% for other digital currencies.
As for perpetual (swap) contracts, only bitcoin and Ethereum are possible to use at this point.
Leverage rate is the same for both while fees range from -0.025% (maker) to 0.075% (taker). You can check out the detailed fee structure in the picture below.
Others platforms where you can trade cryptocurrencies through futures and swaps are:
We would recommend you to check these out as well and compare them to uncover their advantages and disadvantages.
Bitcoin Swap Contracts - Summary
In this guide, we answered the question regarding where can I trade bitcoin futures and swaps. BitMEX stands as one of the prominent figures in the crypto world, offering several other coins, apart from BTC.
However, we would also warn against the risks of the futures and swaps trading. Cryptocurrency market is highly volatile and usage of these instruments can lead towards losses if the proper analysis was not conducted.
We would also recommend reading our guide regarding the Bitcoin trading sites with the highest leverage rates for their clients.
Also, Coinmarketcap derivative site is a great place to get more information about Bitcoin perpetual swaps and trading sites.