Bybit leverage trading and fees - how to trade bitcoin derivatives

Bybit Leverage Trading and Fees

Bybit attract most traders because of its leverage trading features and low fees. Here, we cover the Bybit leverage trading fees and risk management features like Bybit limits, liquidation process, auto-deleveraging, and insurance fund.

No Financial Advice, Information only. Do your own research. 

Cryptocurrencies are high-risk investments.

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What is Bybit Leverage Trading?

On Bybit crypto derivative exchange you can trade perpetuals, USDC settled perpetuals, inverse futures, leveraged tokens, and margin trading.

Bybit doesn’t offer traditional futures with an expiration date.

Bybit Derivative Leverage Trading Markets

Bybit offers many different leverage trading markets. We list all opportunities below.

Bybit Perpetuals

Bybit lists 188 perpetuals and rank as the 6th exchange with most listed perpetual according to Coingecko.

Bybit USDC settled perpetuals

Most perpetuals are settled in USDT. However, Bybit also offers USDC settled perpetual. 

Bybit Inverse Futures

The Inverse perpetual contracts use BTC/ETH/EOS/XRP as the base currency, instead of USDT/USDC/BUSD as normal perpetual do.

Traders need to confirm traded quantities in terms of USD (Quoted currency) and then use their base currency (such as BTC, ETH) to calculate margin, profit, and loss.

Bybit Leveraged Tokens

Leveraged tokens, much like the name suggests, are tokens that give traders and investors a leveraged position in trading. 

The token represents a basket of perpetual contracts in the background. This product has been developed for beginners to leverage trading as an entry point.

Bybit Leverage Trading Fees

Bybit charges some of the most competitive and lowest trading fees for leverage and derivative trading.

In the table below you find all the different fee levels for Bybit. As you can see there are Non-VIP and 3 VIP levels and if you are a professional trader you can get even lower trading fees.

In the next image you find out the requirements for each VIP level with regards to derivative trading fees on Bybit.

Bybit Trading Fees Schedule for Spot and Futures trading

Bybit trading fees shedule for spot market and derivative market

Here, you find all the requirements for each VIP derivative trading level at Bybit. There are three alternatives for each level and make sure to understand you will only have to fulfill one of them

  1. 30-Day derivatives trading volume over a treshold
  2. Hold a certain amount of equity on the platform (Specified in USD)
  3. Hold the BIT token

Bybit VIP Requirements Table

Bybit Leverage Limit

The Bybit leverage limit is different for different trading pairs and trading products. In the lists presented below, we have summarized the most liquid and traded trading pairs and each maximum leverage. Also, read the next section about Bybit dynamic leverage and risk limits.

 

Bybit Perpetual Leverage Limit

Isolated and cross margin
  • BTCUSDT: 100x
  • ETHUSDT: 100x
  • SOLUSDT: 50x
  • ETCUSDT: 50x

Bybit USDC settled perpetuals leverage limit

Cross margin
  • BTC-PERP: 100x
  • ETH-PERP: 66.7x
  • SOL-PERP: 50x
  • AVAX-PERP: 50x

Inverse Futures

Isolated and cross margin
  • BTCUSDT: 100x
  • ETHUSDT: 100x

Leveraged Tokens

Leverage 2x-3x

Bybit Margin Trading Leverage Limit

The leverage limit for margin trading on Bybit is 3x.

Bybit Leverage Risk Limits Review

Bybit uses dynamic leverage to limit the risk for derivative leverage trading. 

Dynamic leverage means the more significant the contract value is, the lower the maximum leverage available. 

The initial margin (IM) requirement goes up for every specific increase in contract value level.

The regular maintenance margin (MM) base rate is constant, and the margin requirements will increase or decrease accordingly as the risk limit (contract value) changes.

Bybit has implemented risk limits since a large position with high leverage may cause huge losses when liquidated in a highly volatile market. This is a way to reduce the risk for large contract losses created when a position is liquidated beneath the bankruptcy price.

In addition, the insurance fund might be insufficient to fully absorb the losses and then the Auto deleveraging (ADL) system will be triggered. The implementation of risk limits is a way to reduce the risk of ADL occurring.

Bybit Risk Limit (Inverse Contract)

The maintenance margin base rate is 0.5% for BTC and 1% for ETH, EOS, and XRP, and the margin requirements will increase or decrease accordingly as risk limit changes.

See full terms and conditions for risk limit on inverse contracts et Bybit.

Risk Limit (USDC Contract)

A USDC margin account supports two margin modes, regular margin, and portfolio margin.

With the regular margin, users can choose to increase or decrease the risk limit.

With the portfolio margin, users are not allowed to adjust the risk limit, which is based on the overall portfolio of the USDC account.

Read the full terms and conditions regarding the risk limits for USDC contracts on Bybit.

Risk Limit (USDT Contract)

Bybit Auto Deleveraging System ADL

Bybit Auto-deleveraging is a risk management feature.

The auto-deleveraging kicks in if a position is closed with negative equity, under the bankruptcy level and if the insurance fund is insufficient to cover the negative equity.

At such an event, Bybit’s ADL system will automatically deleverage the opposing position from the trader with the highest ranking at the bankruptcy price of the liquidated order.

Bybit Leverage Trading Liquidation

Bybit leverage trading liquidation refers to the process of forced selling to be able to pay back the borrowed funds to the lender.

It’s important to understand that leverage trading uses borrowed funds.

To maintain trust in the crypto leverage space, it is important to be able to hand the borrowed funds back to the lender. Otherwise, there will be no lenders and no leverage trading.

Therefore, all crypto leverage trading sites have a mechanism for liquidation.

Liquidations can be categorized into partial and total liquidation. For example:

Partial liquidation: Liquidation that closes a position partially early on to reduce the position and leverage used by a trader.

Total liquidation: Closing a position nearly all of the initial margin of a trader has been used.

Bybit Insurance Fund

Bybit uses an insurance fund to protect its traders from a negative balance.

The insurance fund covers excessive losses and negative equity for traders.

Negative equity can happen when leverage trading positions fail to liquidate over bankruptcy prices due to high volatility in markets. 

The insurance funds collect funds from successfully liquidated positions closedat better than bankruptcy prices.

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