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Where to Trade Cryptocurrency Derivatives – Parallel Review

Deribit, BitMEX, WhaleClub, DeltaExchange, CryptoFacilities

With the current cryptocurrency market hitting investors left and right, the talk about how cryptocurrency derivative trading could help pull the prices out of the slump is louder than ever.

But what are cryptocurrency derivatives in the
first place?

Cryptocurrency (and all other) derivatives
are, in fact, contracts between two entities which don’t have value per se but
are valued according to the underlying asset. The most common derivative in the
cryptocurrency market is Bitcoin (BTC) futures contract.

What Bitcoin futures contract does is that it
obliges a trader to acquire BTC at the predetermined price and time, providing
a form of a shield from the high volatility cryptocurrencies are known for.

Despite the mentioned claims that the derivatives market could revitalize the bear market, not all cryptocurrency trading sites offer derivatives trading services to their customers. Therefore, we are going to dissect some of the most used and compare their general characteristics, security, features, support, and reputation (not necessarily in that order).

Deribit

Trade Cryptocurrency Derivatives - Deribit

As the name of this exchange reveals, Deribit
is revolving around trading Bitcoin derivatives. All transactions on Deribit
are conducted in BTC exclusively along with deposits and withdrawals.

When we already touched withdrawals, fees from 0.0002 up to 0.0015 are applied for every transaction, depending on the predetermined importance decided by the user. The more BTC user is willing to assign for the withdrawal, the more important a transaction is, and therefore, is processed faster.

Deribit offers two kinds of Bitcoin
derivatives:

  • Futures, where the hypothetical contract of
    $10 would bring the rebate of 0.02% for market makers instead of a fee but
    would charge a fee of 0.05% to takers.
  • Options, where the hypothetical 1 BTC size
    contract doesn’t carry fees for makers, while the exchange charges 0.04% of the
    contract size to takers.

Regarding
security, Deribit has a feature unmatched by other similar platforms in the
form of 25 BTC insurance policy. That means that positions which are possible
to end up bankrupt have a 25 Bitcoins in place to keep them afloat if
everything goes wrong.

Techwise,
Deribit’s security has been marked as excellent, as their client’s Bitcoin is
kept in the cold storage to prevent the hacker’s attacks, which has probably,
along with 2-factor authentication, been the reason why the exchange has never
been hacked.

However,
Deribit is far from the most user-friendly cryptocurrency derivative trading
site in the market. Its interface can be confusing at times, presenting a
potentially big issue for those less experienced.

The exchange is operated from physical offices in Amsterdam, providing an extra layer of trustworthiness to the business.

BitMEX

Trade Cryptocurrency Derivatives - BitMEX

Despite the fact that BitMEX was already mentioned in our arrticle about cryptocurrency margin trading, the exchange is a professional trader’s tool and therefore, we had to include this extraordinary cryptocurrency derivative trading platform in this comparison.

Deposits to BitMEX are feeless and are
possible only in cryptocurrencies, while withdrawals are only processed once
per day, and will be charged between 0.001 BTC and 0.05 BTC, depending on the priority of the transaction.

BitMEX
has a few more derivative trading options than Deribit, which can also be traded
with leverage:

  • Futures, available for Bitcoin (BTC), Bitcoin
    Cash (BCH), Cardano (ADA), EOS, Ethereum (ETH), Litecoin (LTC), Ripple (XRP),
    and Tron (TRX), with fees varying in accordance with the asset (see the
    screenshot below).
  • Perpetual Contracts, with 0.0250% rebate for
    makers to 0.0750% for the market takers, and long funding fee of 0.0100%, while
    the short funding is rebated with 0.0100%, every eight hours.
  • Upside Profit Contracts, which carry no fees
    if traded without leverage.
  • Downside Profit Contracts, to which the same
    rule as for their upside counterparts applies.
Trade Cryptocurrency Derivatives - Traditional Futures

Regarding
technical security, BitMEX is offering a very similar set of features as
Deribit, while its current insurance safety net of 21 BTC is, compared to
Deribit’s, a bit lower for bankrupting positions.

Those
less experienced in cryptocurrency trading may, however, find BitMEX to be on
the user-unfriendly side, as its interface is developed for advanced users, and
as such, has a wide variety of complex features.

The company was founded in Hong Kong back in 2014.

WhaleClub

Trade Cryptocurrency Derivatives - Whale Club

WhaleClub is really one of a kind trading
platform. While traders can try to predict prices of various commodities, such
as gold, silver, crude oil, natural gas, and others, all transactions on the
platform are processed in Bitcoin (BTC) exclusively.

Deposits and withdrawals  cannot be made in fiat, but the exchange
supports the following cryptocurrencies:

  • Bitcoin (BTC)
  • Dash (DASH)
  • Ethereum (ETH)
  • Litecoin (LTC)
  • Monero (XMR)

Another interesting thing about WhaleClub is
that it doesn’t charge any fees, including deposits and executions fees, while
withdrawals take only what the native network of the crypto-asset will charge
for the transaction.

On WhaleClub, every pair and asset on the
platform can be traded with leverage, and, besides the usual future contract,
the exchange offers Turbo trading.

Turbo trading is a form of a short-term binary
options gamble, where traders predict the price of the asset in the coming
minutes.

The exchange has never been hacked, and the
security of WhaleClub’s clients is enhanced by the cold storage where users’
funds are kept to protect them from the possible security breach.

When talking about how special WhaleClub
really is, we cannot overlook the fact that it doesn’t require its users to
verify their identity. One can simply set up an account and start trading from
one of the 190 countries supported by the exchange.

The trading experience on WhaleClub is
unmatched, from the starting tutorial to the intuitive interface which makes
trading enjoyable even for inexperienced traders.

The company behind WhaleClub was founded in 2016 in Hong Kong.

Delta Exchange

DeltaExchange is a pure cryptocurrency derivative trading ground, which means that their clients can only deposit, withdraw, and trade cryptocurrencies derivatives.

Deposits on the exchange are feeless, but users still have to cover the expenses of the Bitcoin network according to its congestion and the priority of the transaction required.

DeltaExchange offers traditional, inverse and vanilla futures contracts for the following assets with transparent fees (the table below), which can be traded with the maximum leverage of 100:1:

Trade Cryptocurrency Derivatives - Delta Exchange Trades

Cryptocurrencies on DeltaExchange are stored
in multi-signature wallets, and to further enhance the security of the system,
withdrawals are processed only once per day, with the manual revision.

Since there aren’t many trading options on the platform, more experienced users may find DeltaExchange to be lacking in depth. Still, that may prove to be an upside for newbies in derivatives trading as the user interface will not confuse them with extra trading options.

CryptoFacilities

 Trade Cryptocurrency Derivatives - Crypto Facilities

Although it is definitely the least known of
all our entries, Crypto Facilities exchange recently ended up in all the major
crypto-related media outlets as it has been bought by one the major players in
the cryptocurrency exchange industry, Kraken.

As these takeovers always bring public
attention, this smaller-scale trading platform deserved a place of an honorary
mention in this comparison.

Crypto Facilities offers 6 possible futures
contracts pairs:

  • Bitcoin (BTC) / USD
  • Ethereum (ETH) / USD
  • Litecoin (LTC) / USD
  • Bitcoin Cash (BCH) / USD
  • Ripple (XRP) / USD
  • Ripple (XRP) / Bitcoin (BTC)

All USD-related contracts are what traders
call inverse futures, which can be leveraged from up to 25:1 to up to 50:1,
depending on the pair, while the XRP/BTC contract has a vanilla option, and can
be traded on a margin of 25:1. All contracts can mature monthly or quarterly.
However, traders can also choose to make a perpetual contract with any given
pair.

Deposits and withdrawals on the platform can
only be made in cryptocurrencies, with fees charged only for covering network’s
expenses of the cryptocurrency being withdrawn.

The trading site differentiates market makers
and takers, and makers are given a rebate of 0.03% for any futures contract,
while takers will be charged a flat 0.05% transaction fee.

Since the security is so important, we have to
underline the fact that the Crypto Facilities trading platform is registered in
the UK, where it
is being overseen by the Financial Conduct Authority (FCA), which can surely
add to the overall trustworthiness of the platform. Moreover, their client’s
funds are kept in cold storage wallets backed by the well-known crypto-security
firm, Elliptic.

Compared to the two mentioned professional-oriented platforms, the Crypto Facilities’ user interface is simple and easy to navigate, providing a user-friendly trading experience.

Conclusion

Trading cryptocurrency derivatives isn’t for everybody. One has to be familiar with the concept and risks of futures, options and other contracts, especially if they are combined with a margin option.

Still, each of these platforms offers some
features that some traders may or may not like.

While BitMEX and Deribit are meant to be used
by advanced traders who know how to fully exploit all the trading options,
WhaleClub provides a 100% unique trading system backed by the unmatched user
experience.

Sometimes, many features tend to confuse
newcomers, and the simplicity of DeltaExchange may just be the thing that an
aspiring trader needs to get on his feet.

On the other hand, Deribit’s insurance policy
is always great to have on the side when conducting such a risky business as
trading futures contracts. However, the fact that the majority of these
companies are registered in slightly less regulated environments than Crypto
Facility can tell the story of its own.

In the end, it is up to each individual to find the one trading site that suits his needs, and since none of us has the same preferences, he has to experience the interface and features on his own. He has to explore.

Until the next time, trade responsibly.

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