Is a crypto market meltdown looming after massive gains in Bitcoin, Ethereum and altcoins in January?

OKEx has one of the largest selections of altcoins for futures contracts. Hong Kong-based OKEx is another major exchange that has delved into crypto derivatives in order to keep up with its rivals. According to a recent CryptoCompare report, OKEx has surpassed Huobi for derivatives trading with a month-on-month volume increase of over $160 billion.

This huge variety of derivative products makes OKX viable for traders who want to trade in Altcoin derivative products. Further, OKX is one of the most liquid exchanges for derivatives trading. To have a better understanding of derivatives trading, it is necessary to first define derivatives. A derivative is a contract between a seller and a buyer to trade an underlying asset at a predetermined price. A Bitcoin futures contract, for example, enables traders to hedge positions to reduce price volatility by signing an agreement that settles on an underlying auction price of a Bitcoin. In general, derivatives trading refers to a system in which traders sign a contract to trade an underlying asset at a certain date and price.

Our Products

The Commodity Futures Trading Commission now permits the trading of cryptocurrency derivatives publicly. Other data points in the survey included the problems that cryptocurrency traders experience with cryptocurrency exchanges and the expectation of traders. Several do not report basic information such as the names of the owners, financial data, or even the location of the business.

Bitmex offers derivatives products on various tokens such as BTC, ADA, BNB, DOT, DOGE, EOS, ETH, etc. Many of these derivative exchanges offer perpetual contracts, meaning your position never expires as long as you are not getting liquidated. Before trading in derivatives, the trader should ideally have a plan. Some exchanges have cheaper fees for their native tokens, so it may be advantageous to utilize them to save money.

Cryptocurrency Exchange Software Development Company

Gate.io is an excellent crypto exchange that has gained popularity because of its unique product offerings. It stands tall in the list of best crypto exchanges, and its derivative products are also not short of anything. When choosing a financial instrument, it is critical to analyze the price trend.

For instance, for a $100,000 portfolio, you can hedge the entire exposure by opening a short position in a 10x perpetual futures contract for just $10,000, or 1/10 of its market value. In this scenario, a 10% gain in this position would have doubled your initial investment. Liquidity refers to the ease of transacting orders in a market without affecting the price of an asset.

The platform also offers great user support and is suitable for both novice and experienced traders alike. Further, Bitmex also allows users to take advantage of leveraged trading with up to 100x margin. The platform also offers a variety of order types, including limit, market, iceberg, and stop orders. Crypto derivatives are a secure tool for managing risks caused by the significant volatility of digital assets. Previously, we witnessed a sharp change in the value of crypto coins, which made crypto exchanges vulnerable institutions, and many traders hesitated to invest in such quasi-money.

For example, if you purchase a call option for BTC at $10,000 that expires in a week, this means that one week later, regardless of where the price is at, you have the option to buy one BTC for $10,000 . If the price of BTC has risen to $11,000, you would certainly exercise your right as you can purchase a BTC for a cheaper price and then sell it for a $1,000 profit. If the price has dropped below $10,000, you would simply choose to let the option expire as purchasing a BTC at the strike price would translate to a loss. In this case, the primary asset would be a cryptocurrency such as Bitcoin.

Where to Trade Crypto Derivatives

The call option grants the buyer the right, but not the obligation, to buy the asset at a later date at a given price, whereas a put gives the right to sell at a later date or specified price. These contracts are agreements that you sign with an opposing party. Let’s return to BTC and imagine that you believe the price will go up while another person believes the price will go down. A Bitcoin derivative, on the other hand, can allow people to trade contracts that follow the price of Bitcoin without ever having to actually own any Bitcoin. An analysis of archived messages in BitMEX’s site-wide chat room illustrates a highly diverse population of traders. Most interestingly, messages in Korean — the vast majority presumably originating in Korea, which encompasses a single time zone — were almost time-invariant.

In addition to essential services such as spot and margin trading, Huobi has a substantial trading volume in the derivatives market. Traders frequently make gains from the crypto market by correctly forecasting price movement. https://xcritical.com/ Whether it’s a rise or fall in price, the trader’s judgment determines if he is profitable or not. Instead, traders can do lots more by buying crypto derivatives, also called exchange trading in derivatives.

Call & Put Options on BTC & ETH.Perpetuals on BTC, ETH and 50+ Alts

Another characteristic of spot markets is that they force traders to hold the assets they want to speculate on. A trader can hold the contract for as long as they wish to until they close the position of their own accord or forced into liquidation due to margin issues, for example. Derivatives are inherently secondary securities as their value is derived from the value of the primary security that they are linked to. Examples of derivatives commonly include futures contracts, forward contracts, options, swaps and warrants. By now, I believe you have already sensed this, and the fact you are here tells me about your interest.

• OKX wants traders to come into their derivatives market with a little knowledge of how things work.
• If the price of BTC has risen to $11,000, you would certainly exercise your right as you can purchase a BTC for a cheaper price and then sell it for a $1,000 profit.
• An illiquid market is the opposite, as fewer market participants are willing to transact in the market.
• CoinMarketCap ranks the top cryptocurrency derivatives exchanges using an algorithm based on multiple factors including liquidity and normalized volume.
• The ASIC viewed the services offered as legally requiring an Australian Financial Services License, which the companies lacked.
• For example, if you use 100x leverage, this means you can start with $100 and multiply it by 100 to trade a position worth $10,000.

A limited range of payment methods is available, with only cryptocurrency deposits and withdrawals being supported. For example, the most popular type of cryptocurrency derivative is the BTC futures trading through BTC futures. Of course, now new players have entered the crypto market, but in terms of brand name and liquidity- BitMEX still stands in the top ten platforms in the derivatives market.

Reasons For Trading Derivatives

You should consider whether you understand how an investment works and whether you can afford to take the high risk of losing your money. Until BIT’s launch of the TON options trading, market participants could only access options pegged on the world’s two largest cryptocurrencies by market cap – Bitcoin and Ethereum . According to details shared with CoinJournal via a press release on Thursday, trading options for the digital token will also go live on Paradigm in early February. Paradigm is a leading institutional-focused derivatives liquidity network. The highest leverage is available on the BTC contract at 125x while the rest have leverage of 75x or 50x. There are minimum and maximum contract quantities for each asset and they are subject to margin rates and liquidation fees.

Cryptocurrencies can fluctuate widely in prices and are, therefore, not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework. Any trading history presented is less than 5 years old unless otherwise stated and may not suffice as a basis for investment decisions.

This way, the smart trader saved himself $5000 per BTC by trading the derivatives of Bitcoin, which are deriving its price from the underlying price of actual Bitcoin. It also follows the maker and taker model to allow you to trade BTC and ETH futures, swaps & options, which you will not find in other places. In terms of fees and ease of sign-up, it is similar to the BitMEX exchange, but in terms of liquidity, it is a bit less but still does a decent crypto derivatives exchange job. Moreover, you will find crypto options also here, which are hard to find. Bakkt is a highly-anticipated cryptocurrency futures exchange that is backed by Intercontinental Exchange , which is the 3rd largest exchange group in the world, behind CME and Hong Kong Exchange. Not only is Bakkt owned by the parent company of the New York Stock Exchange , Bakkt is supported by various heavyweights such as Microsoft, Starbucks and Pantera Capital.

Types of Crypto Derivatives

These are perpetual contracts that are settled in cryptocurrencies such as BTC, ETH, etc. Derivates trading is not new to the crypto market, and many traders make life-changing money with derivative trading. So, we at CoinSutra searched for the most widely used and trusted ones and presented you with our Best Crypto Derivatives Exchanges list. In 2004 three Australian-based digital currency exchange businesses voluntarily shut down following an investigation by the Australian Securities and Investments Commission . The ASIC viewed the services offered as legally requiring an Australian Financial Services License, which the companies lacked.

Customers provided limited identity documentation, and could transfer funds to anyone worldwide, with fees sometimes exceeding $100,000. Derivatives are financial instruments whose value is derived from an underlying asset or group of assets such as an index. The derivative itself is a contract between parties, which derives its price from fluctuations in the underlying asset. The benefits of an established derivatives market go beyond the uses of an individual’s portfolio. It improves the underlying cryptocurrencies as a complete financial product that caters to demand from both retail and institutional investors.

Additionally, they are well suited to traditional traders who are used to dealing with such investment vehicles for other assets. BitMEX is one of the world’s most popular crypto exchanges for derivatives and leveraged trading. It offers a wide range of derivatives products for a number of different crypto assets, with different levels of leverage. According to Nasdaq, 2019 saw a number of new cryptocurrency derivatives exchanges looking to gain a share of the market. Citing a TokenInsight report, it added that 2020 is expected to be even bigger for cryptocurrency derivatives, with the market predicted to outstrip the spot trading scene by as much as 100 percent. Bitcoin options are also crypto derivative contracts that follow the price of bitcoin, except these do not necessarily have to be settled at their expiration dates.

Is a crypto market meltdown looming after massive gains in Bitcoin, Ethereum and altcoins in January?

Publicly circulating amount of specific cryptocurrency coins/tokens that were mined or issued to date, and are not locked/staked . The current cryptocurrency Market Capitalization Dominance among all other cryptocurrencies in the market. For most assets in the chart above, there are red bars , however the difference remains slight. This means markets can move either way, and suggests Bitcoin and Ethereum prices could be shaped by the outcome of the Federal Open Market Committee meeting concluded on Wednesday.