Bitmex vs Deribit Review: Which Crypto Margin Exchange Is Better?

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BitMEX vs Deribit: Which is the best cryptocurrency margin exchange?

There are many cryptocurrency exchanges that offer leverage.

However, most of them don’t get close to the liquidity and trading options that BitMEX and Deribit offer.

In this guide, we review both platforms to help you decide if you should margin trade on BitMEX or Deribit.

And yes, on the contrary to most other reviews out there, some of our staff actually uses both platforms actively.

Bitmex vs Deribit Compared

 BitMEXDeribit
bitmex logoderibit logo
24h Volume$3.5B+$450M+
InstrumentsFuturesFutures and Options
Max Leverage100x100x
Supported Assets82
SecurityVery StrongStrong
Customer SupportExcellentGood

BitMEX vs Deribit Review

BitMEX is a cryptocurrency derivatives trading platform that was launched back in 2014 by an experienced group of co-founders.

The platform is headed up by co-founder and CEO Arthur Hayes, who has risen to become somewhat of an icon in the crypto trading space thanks to his bullish views on the future of cryptocurrency and blockchain technology.

Short for the Bitcoin Mercantile Exchange, BitMEX is regarded in the space as the largest of just a small handful of Bitcoin futures exchanges.

crypto margin trading bitmex

The platform exploded in popularity during the 2018 cryptocurrency bear market and remains the most popular crypto margin exchange to this day.

Deribit is also a cryptocurrency derivatives trading platform, but with a combined focus on both crypto options and futures.

The margin exchange was launched in 2016, becoming the first Bitcoin futures exchange to also offer crypto European style options.

Just last year, Deribit joined BitMEX in being one of the few crypto margin exchanges to offer a BTC/USD perpetual swap, removing the expiry dates typically associated with Bitcoin futures and allowing users to receive a constant payout.

deribit margin trading platform

Being derivatives trading platforms, BitMEX and Deribit don’t actually provide any spot trading functionality.

Instead, users are able to trade a range of cryptocurrency derivatives contracts, allowing them to speculate on the changing value of the underlying asset, without actually purchasing that asset.

Designed for professional traders and investors, Deribit is what is known as a full-stack crypto trading platform, since it offers both futures and options contracts.

deribit Bitcoin options

On the flipside, BitMEX only offers crypto futures for the time being.

Although both BitMEX and Deribit are powerful platforms designed with experienced traders in mind, there are several key differences between the two, which could sway many users one way or the other.

In our BitMEX and Deribit review, we will provide an unbiased breakdown of the pros and cons associated with each platform, to help you make an informed decision about which platform if any, you choose to use.

When comparing Deribit vs BitMEX, there are several important considerations to be made, we recommend basing your choice on the features that matter most to you, rather than simply taking our word for it.

NOTE: Due to the nature of the platforms, we advise against using BitMEX reviews and Deribit reviews from platforms like Trustpilot and the like. These tend to be overwhelmingly bad for the simple fact that many people do not understand the risks involved with margin trading, and hence leave a review after being liquidated when making a losing trade.

Contract options and leverage

WINNER: BitMEX

  • BitMEX offers more futures contracts.
  • Deribit offers options, in addition to futures.
  • Both exchanges offer up to 100x leverage.

When comparing BitMEX vs Deribit in both contract options and leverage limits, the two crypto margin exchanges stack up very closely, which is why many traders often find it difficult to confidently choose between the two.

On one side, BitMEX is a pure futures exchange, allowing customers to purchase either perpetual futures contracts or fixed-term contracts for XBT and ETH, whereas all other digital assets have only a single fixed term futures contracts available.

Beyond Bitcoin (XBT), BitMEX offers contracts for seven other cryptocurrencies, including EOS, Tron (TRX) and Ripple (XRP), though these are opened and settled in XBT.

bitmex available coins

On the other side, Deribit only offers Bitcoin (BTC) and Ethereum (ETH) contracts, though does offer both futures and options for both cryptocurrencies.

deribit assets

Deribit places a particular focus on its BTC and ETH options, offering a large range of strikes and expirations, comparatively, it offers less choice with its futures contracts, with just 2 expirations and perpetuals available.

Because BitMEX doesn’t offer options, we cannot further compare Deribit vs BitMEX on this front.

For Bitcoin perpetual swaps, BitMEX lets you set up to 100x leverage, and up to 50x for Ethereum and 33.3x for Litecoin. All other cryptocurrencies have a maximum of 20x leverage.

Unlike BitMEX, Deribit doesn’t allow traders to simply select the leverage when purchasing contracts, instead the entire account value is used as equity for any open positions. This allows users to open positions with as little as 1% margin, equivalent to 100x leverage.

Overall, although Deribit does provide both futures and options, the number of contracts available at BitMEX and the high leverage available for altcoin contracts give it the slight edge here.

Liquidation policy

WINNER: BitMEX

  • The BitMEX insurance fund is magnitudes larger than Deribit’s.
  • Both exchanges use automatic liquidation when the minimum margin is not maintained.
  • Both exchanges charge a similar liquidation fee.

Since positions are leveraged on both Deribit and BitMEX, both platforms employ a fair automatic liquidation process if the position margin falls below acceptable levels.

To achieve this, Deribit employs an auto-liquidation policy which will gradually close positions when account equity falls too low.

At the moment, Deribit will close 10% of your position each time, or a minimum of 500 contracts at $10 each until your margin is back under 100% of your account balance.

On BitMEX, higher margin levels are required for larger positions.

Users on the lowest risk tiers will have open orders on a contract closed to improve the maintenance margin, or the position may be entirely liquidated at the bankruptcy price if this is insufficient.

Higher risk limit tiers will be partially liquidated to bring the user down to a lower risk limit, with full liquidation being a possibility if this is insufficient.

BitMEX uses the insurance fund to avoid automatically deleveraging traders positions. This has been growing at a staggering rate since the platform opened in 2016, and the fund currently sits in excess of 27,000 XBT, worth around $230 million as of writing.

By practically all accounts and measures, the BitMEX insurance fund is vastly overcapitalized, which means it easily has enough funds to cover practically any adverse situation.

Therefore, even if the market moves so sharply that most of its longs or shorts are stopped out, BitMEX should have enough in the insurance fund to stop the market from failing if sell orders massively outweigh buy orders.

Deribit has a similar fund, which currently sits at 147 BTC, or $1.25 million. This fund will be used to cover any losses resulting from bankrupt traders.

This means if the volatility really ramps up, Deribit should be able to cover the profits and losses that could result from sharp market movements.

However, being less than 1% the size of the BitMEX insurance fund, Deribit users are less protected in this regard.

To summarize, both crypto margin exchanges use automatic partial to total liquidation to ensure customers stay above the minimum maintenance margin. Since the BitMEX insurance fund is more than 100x larger that Deribit’s, it wins this category.

Safety and security

WINNER: BitMEX

  • For greater security, BitMEX only processes withdrawals once a day.
  • BitMEX has been around since 2014, without a single security breach.
  • Deribit’s security is still unproven since the exchange is much younger.

Since its launch in 2014, BitMEX has grown to become easily the largest Bitcoin futures exchange on the market.

While its size might be impressive, this also makes the platform arguably a bigger target for hackers, who would like nothing more than to drain the platform dry.

However, in its five years of operation, BitMEX has never been hacked, an accolade that is entirely attributed to the unwavering security of the platform.

All BitMEX funds are kept offline, and BitMEX addresses are secured by multiple signatures. According to the BitMEX itself, even if the entire BitMEX system was compromised, a hacker would still not have enough keys to steal user funds.

Beyond this, BitMEX also gives users the option to enable Yubikey or Google Authenticator-based two-factor authentication, and offers an IP Pinning option, to force unknown IPs to log out.

Lastly, Bitcoin withdrawals must be made before 13:00 UTC, and are processed once per day, allowing BitMEX to manually intercept hackers should there be an issue.

bitmex withdrawal time

While BitMEX is quite the beast in terms of security, Deribit is also extremely well protected, offering users the opportunity to use authenticator-based 2FA, enable automatic logouts after 1 hour, and activate IP Pinning.

In terms of back-end security, Deribit keeps more than 95% of user funds in cold storage, with the remainder kept in a hot wallet used for immediate withdrawals.

Beyond this, Deribit does not provide further information on how it ensures the integrity of its servers and cold-storage funds, though still maintains a flawless security record.

However, since Deribit was launched a couple of years after BitMEX in 2016, and features arguably the highest security of any crypto exchange platform period, BitMEX takes this one with ease.

Liquidity

WINNER: BitMEX

  • With an average daily volume of $3 Billion, BitMEX is by far the most liquid crypto exchange.
  • Deribit currently has $200 Million in daily volume.
  • During times of high volumes, BitMEX sometimes experiences “overload” errors.

In terms of daily trade volume, BitMEX blows Deribit out of the water, typically achieving close to $3 billion in daily trade volume for BTC/USD contracts, which is more than 10x higher than the $200 million achieved by Deribit for the same.

bitmex trading volume

With that said, Deribit is by no means illiquid, having easily enough liquidity for even the most demanding of traders.

Unfortunately, the popularity of BitMEX does come with its drawbacks. The first of which is the fact that BitMEX has been known to go down or freeze during times of peak trading activity.

This can prevent traders from entering or exiting their positions, potentially causing users to miss out on profitable opportunities.

When comparing Deribit vs BitMEX on this front, the former is not known to suffer uptime problems when the market gets hot, which is ideal for those who like to jump in right when the action is at its peak.

In this vein, BitMEX is also very upfront about the limitations of the platform, and have expressed plans to both increase the speed of its order matching system, and prepare the platform for the next big growth spurt.

bitmex improve performance

Similarly, Deribit recently completed a platform upgrade that massively boosted the scalability of the platform and improved the order matching algorithm to ensure Deribit can cope with any load.

All in all, BitMEX edges out Deribit simply due to its unmatched volume, though Deribit may be the ideal choice where uptime is paramount.

Fees

WINNER: BitMEX

  • BitMEX and Deribit charge a 0.075% taker fee and 0.025% maker fee for perpetual contracts.
  • Funding fees for perpetual swap contracts vary depending on how far the exchange’s price is from the index price.

When it comes to cryptocurrency trading, simply trading at the platform with the lowest fees is rarely a good idea, since there are often drawbacks associated with low fee platforms.

Despite this, both BitMEX and Deribit offer some of the lowest fees around, particularly given their high volume.

For perpetual contracts, both BitMEX and Deribit charge a 0.075% taker fee, while makers are paid 0.025% for providing liquidity.

Beyond this, By default on BitMEX, long funding attracts a 0.01% rebate, whereas short funding attracts a 0.01% fee, though this can be higher if the index premium spikes.

bitmex fees

For Bitcoin futures, BitMEX charges a 0.075% fee for liquidity takers and a 0.05% settlement fee, liquidity providers are provided with a 0.025% rebate. For other futures, the fees change to -0.05% for makers, and 0.25% for takers, with no settlement fee.

Conversely, Deribit provides a 0.02% rebate for market makers, and charge a 0.05% fee for market takers on Bitcoin futures. These are increased to 0.025% and 0.075% respectively for ETH futures, while the settlement fee is half the taker fee.

Deribit does not have a default margin funding fee, but this is typically lower than BitMEX on average.

In addition, since Deribit also offers options contracts, these have a 0.00004 BTC/ETH maker and taker fee, or 0.04% of the option value, with half of the taker fee charged for settlement.

Overall, for Bitcoin traditional futures, BitMEX has the slightly better offering, and has a lower settlement fee than Deribit, while Deribit beats the former in terms of margin funding fees, making the two platforms roughly equal.

User experience and ease of use

WINNER: Deribit

  • Deribit is optimized for mobile while BitMEX is not.
  • Deribit processes withdrawals all around the clock, BitMEX only once a day.

Both BitMEX and Deribit are considered to be intermediate, to advanced trading platforms, which means their layout and features are best tailored towards more experienced traders.

Both platforms have a testnet version that allows users to try out the respective platform without risking their funds.

BitMEX reviews their user experience regularly and do implement fixes here and there to make navigating the platform as easy as possible.

Despite this, the user interface remains relatively clunky. Conversely, Deribit has a much more streamlined UI, particularly if you like to feel your way around a website.

deribit margin trading platform

On BitMEX, adjusting leverage is an extremely simple process, with traders using a simple slider to adjust the leverage between 1x and 100x.

margin trading bitmex

On Deribit, setting specific leverage is a more involved process, since the leverage is automatically tied to your account balance. Adjusting the leverage is a matter of choosing how many contracts to buy relative to your account balance.

If you purchase $500 worth of contracts and your balance is $5,000, then your leverage is automatically set to 10x.

Additionally, Deribit can separate their funds into sub-accounts, allowing them to easily manage their money and isolate funds for different trading strategies.

If you are a mobile trader, then Deribit will likely suit you best, since it offers a dedicated mobile app, saving you the hassle of navigating the trading platform through your mobile browser.

Unfortunately, however, the same can’t be said for BitMEX, and the website isn’t exactly mobile optimized, which can make mobile trading a clunky, frustrating experience.

Unlike BitMEX which processes withdrawals only once a day, Deribit allows users to withdraw their funds at any time, which makes the exchange more convenient.

Altogether, a casual user comparing BitMEX vs Deribit will almost certainly find the latter easier to navigate, but the former easier to use.

Account requirements and restrictions

WINNER: Deribit

  • Both BitMEX and Deribit don’t require KYC verification.
  • BitMEX does not allow US Citizens, while Deribit does.

Differing from most spot trading exchanges, both BitMEX and Deribit do not require KYC verification, and ask for very little personal information from users, making both platforms extremely accessible to customers.

Beyond this, both platforms also offer 1-confirmation deposits, whereby Bitcoin deposits are available to trade after just a single network confirmation.

Neither platform implements a fixed deposit or withdrawal limit, leaving customers free to transfer as much or as little money to the exchange as they like.

In terms of availability, both platforms are pretty much on par with Deribit offering its services to practically all countries, while BitMEX is slightly more restrictive, banning citizens from the United States from using its services.

Both platforms also feature a minimum order size of a single contract, though the price of each contract differs between Deribit vs BitMEX, which each contract on BitMEX costing $1, vs $10 at Deribit.

BitMEX has a variable maximum order quantity of between 1 million (e.g. BTC) and 100 million contracts (e.g. XRP) depending on the asset, whereas Deribit has a maximum order position of $10 million for both futures and options.

Altogether, though both BitMEX and Deribit are largely similar in their usage restrictions, BitMEX’s lack of availability in the US is a serious blow, that could drive many to Deribit by default.

Customer Support

WINNER: BitMEX

  • Both exchanges have a fast and competent customer support team.
  • BitMEX has an invaluable help center and “Research” blog.

BitMEX makes a point of directing the majority of customer issues through its internal ticket support system since the ticket support team can handle even the most complex of user issues.

However, BitMEX also handles customer issues through alternative platforms, including Weibo, IRC, and Telegram (Russian only), along with Twitter and Reddit.

bitmex customer support

Deribit, on the other hand, mostly handles customer support through email, offering dedicated support for both general users and API users.

Registered users can also receive support by logging in and using the live chat feature, though there is often a small wait involved before being connected to an agent.

Both platforms feature an extensive FAQ to answer the most basic queries.

The BitMEX knowledge base contains a large number of useful tips for the platform, and BitMEX also provides a vast array of educational resources, helping users get to grips with margin trading.

bitmex helpcenter

Not only this, but BitMEX also has its own research blog, providing educational content on Bitcoin and covering important crypto news.

Similarly, Deribit also provides a broad range of educational resources, covering the core concepts of the Deribit platform, as well as maintaining a blog with more general information.

Since BitMEX provides extremely high-value content through its BitMEX research blog, and features the larger array of support options, comparing BitMEX vs Deribit on this front paints BitMEX as the superior choice.

What makes BitMEX unique?

One of the many reasons why users prefer BitMEX over its competitors is the colossal insurance fund it uses to prevent auto-deleveraging of open positions — keeping a check on unfilled liquidation orders.

Beyond that, BitMEX provides easily the highest liquidity of all crypto futures exchanges, being larger than all other competing platforms, including Deribit, Delta, Kraken, etc combined.

This impressive liquidity also extends to its altcoin futures, allowing users to buy contracts in these markets without fear of slippage, often with higher leverage than anywhere else.

BitMEX reviews competing platforms regularly, and makes adjustments to help it stay ahead of the curve, and with BitMEX research digging deep into the market, it is likely some show-stopping upgrades are in the works.

BitMEX is known for its world-class security standards and has implemented a unique multi-signature deposit and withdrawal scheme to protect user funds.

In addition, BitMEX supports anonymous accounts and ensures every withdrawal request is manually audited by at least two staff members, making it practically impossible for hacked accounts to be drained.

Another thing that sets the BitMEX apart from the rest of its competition is the development of its trading platform engine that was done using kdb+, which is a high-frequency banking-grade commercial software development tool kit.

This ensures BitMEX is able to handle a huge number of simultaneous orders.

Lastly, BitMEX supports both cross margin and isolated margin methods, allowing users to either use their entire account balance as equity for any positions they open or limit their risk to the initial margin posted.

What makes Deribit unique?

After Bitmex, Deribit is the second largest exchange offering Bitcoin Perpetual Swap futures, which have no expiry, and are hence never automatically settled.

When drawing a comparison between BitMEX vs Deribit, it is important to remember that unlike BitMEX, Deribit does not restrict US citizens from trading on the platform as there is no clear regulatory framework in the Netherlands or Europe that requires them to do so.

From a security perspective, Deribit keeps the great majority of user funds in a secured cold wallet, with only a nominal amount left in the hot wallet to cover withdrawals and site operations.

This greatly reduces the amount of cryptocurrency that could potentially be exposed if the site is compromised, minimizing any losses.

Since Deribit is a Contract for Difference (CFD) trading site, no actual purchase of any cryptos ever takes place on the platform. The only deposit and withdrawal payment gateway is Bitcoin base.

This further allows them to provide users the option to operate anonymous accounts with little to no identifying information required.

Furthermore, since trading on Deribit uses cross-margin auto leverage, it allows users to do open leverage positions based on the equity in their accounts.

This, backed with support for sub accounts for splitting portfolio along with a fast deposit and withdrawal process, makes Deribit stand out from the crowd.

In a comparison between Deribit vs BitMEX and Bitfinex, it was found that Deribit has by far the fastest order execution time, at just 6.1 milliseconds, easily eclipsing the 1.1 seconds and 156 milliseconds offered by its respective competitors.

This makes Deribit particularly suitable for high-frequency traders looking to take advantage of short-term price fluctuations.

How to start margin trading on BitMEX

1. Sign-up and create an account

Creating an account on BitMEX couldn’t be any easier. To begin, simply head over to the BitMEX registration page, where you will be asked to provide your email, create a password, as well as enter your country of residence and name.

register on bitmex

After creating your account, you will receive a confirmation email with a link you will need to click to finalize the sign-up process.

2. Deposit BTC

After clicking the verification link, you will automatically be redirected to the BitMEX trading interface. Here, select the ‘Account’ tab at the top of the page, before clicking the large green “Deposit’ button to retrieve your personal BTC deposit address.

deposit funds on bitmex

Now, simply deposit BTC to the address shown on screen, and wait for the transaction to be confirmed. After a single confirmation, the balance should be visible in your BitMEX wallet.

3. Create an order

Once your balance is available to trade, click the ‘Trade’ button in the header to open the trading interface.

Next, on the top of the page, you will find all the different contracts available, e.g. Bitcoin, UPs/DOWNs and Ethereum.

bitmex available coins

Select the contract and expiration date to trade beneath in this section to open the order options panel on the left.

open trade on bitmex

In the order options sidebar on the left, enter the trade specifics, such as the number of contracts you want to buy, and the leverage of your position before clicking the ‘Buy (or) Sell Market) buttons to open your order.

margin trading bitmex

For Bitcoin, BitMEX offers up to 100x leverage. For the less liquid pairs, BitMEX offers up to 50x leverage for Ethereum, and up to 25x leverage for altcoins like Cardano, Ripple, and Litecoin.

How to start margin trading on Deribit

1. Sign-up and create an account

Like BitMEX, creating an account on Deribit is a fairly straightforward process, requiring minimal personal information to get started.

To begin, create your account by entering the required fields on the Deribit registration page.

deribit registration

Since there are not KYC requirements, you will only be asked for your email address and country of residence when applying.

2. Deposit BTC or ETH

Once registered, you will need to verify your account by clicking the link in your confirmation email, which will automatically log you into your new account.

While logged in, hover over your username on the top right of the Deribit dashboard, and select the ‘Deposit’ option from the drop-down menu.

deposit options deribit

Here, select either Bitcoin or Ethereum in the header, before clicking the ‘Get New Deposit Address’ button to generate your unique address.

This will be displayed on the right-hand side of the button, along with a QR code address for your wallet

deposit bitcoin deribit

Deposit your BTC or ETH to the address provided, and wait until it is confirmed before progressing to the next step.

3. Create an order

Once your funds are visible in your available balance you will then be able to begin trading. To start, click on one of the available contracts listed in the left panel from anywhere on the site.

deribit assets

After selecting your contract, the trade specifics will open beneath the charts, allowing you to select whether you want to place a market or limit order, enter the number of contracts and choose your leverage.

bitcoin buy order deribit

Once your trade details are set, simply click the ‘BUY’ or ‘SELL’ button to open your order.

What exactly is a crypto margin exchange?

Crypto margin exchange platforms are trading platforms that allow you to open larger than usual orders by essentially borrowing money from the exchange or margin lenders.

This larger position increases your exposure to market movements, and hence increases the gains or losses associated with your investment.

Going forward, it is necessary to understand what crypto derivatives are and how they can be traded on these platforms.

Simply put, crypto derivatives are financial assets that derive their value from an underlying crypto asset, whether that be Bitcoin, or one of the myriad altcoins.

Comparing BitMEX vs Deribit or any other exchange, margin trades usually work in more or less the same way, so once you know how to use one platform, using others becomes a much simpler process.

To understand how margin trades work, let’s take a look at a brief example exploring a trade for a Bitcoin-based derivative.

Let’s suppose, you want to buy a Bitcoin derivative contract and you have $200 in your account. With margin trading, you can borrow up to the leverage limit allowed by the trading exchange.

If you are able to get 5x leverage, then you would be able to purchase up to $1000 worth of contracts.

As a result, when the trade completes, you will realize profits for $1000 worth of Bitcoin contracts purchased instead of $200, minus the loan’s interest rate and trading fees imposed by the exchange.

This means if Bitcoin gained 10% during that period, you will actually see a return of $100, which is equivalent to 50% of your investment (ignoring fees).

What are the drawbacks to trading on margin?

Although crypto margin exchanges provide traders with an excellent way to both multiply their exposure to positive price movements and hedge their portfolio against sharp declines, margin trading does come with its own set of risks.

Arguably the most significant of these risks are magnified downside exposure as a result of controlling a much larger position than with spot trading, making it much easier to lose your entire initial investment, particularly when trading with high leverage.

Beyond this, crypto margin trading also carries with it much higher fees than standard spot trading, and these fees are often not simple to calculate in advance, potentially cutting deep into your profits.

However, if trading carefully, and with proper research, these two potential drawbacks can largely be avoided, leaving crypto margin trading as a potentially lucrative mode of investment when done right.

Why use a crypto margin exchange like Bitmex or Deribit?

If you are an experienced spot trader and have started to feel that the range of trade options is simply not enough to execute your masterplan of becoming the next Bitcoin millionaire, then margin trading might be your next move.

Though they may require you to overcome a small learning curve, trading futures and options at BitMEX and Deribit can provide you an excellent way to diversify your portfolio, and can prove to be a powerful tool in your trading arsenal.

If you are looking to cut through the fat and simply find out what the benefits of using these crypto margin exchanges is, then look no further as this is the section for you.

Speculate with more capital than you own

Trading on margin essentially means you are able to open positions larger than you can actually afford by borrowing the difference from the exchange or other providers.

This difference — known as the margin — is some multiple of your actual investment. This multiple is the leverage and can be as high as 100x on both BitMEX and Deribit.

By opening larger trades than you can otherwise afford, you essentially multiply the profits you would otherwise earn by the leverage ratio, allowing you to turn a healthy profit with even a modest investment if the markets are in your favor.

More liquidity

Arguably one of the major benefits of Bitcoin margin exchange platforms is the extreme liquidity that many of them provide. This means contracts are settled very quickly, while deep order books protect traders against excessive volatility.

In fact, BitMEX is widely considered to be the highest volume cryptocurrency exchange in existence, achieving a reported $1 trillion in notional trading volume at average leverage of 8.6x.

Deribit is no slouch either, regularly clocking in over $250 million in daily trade volume, the majority of which is for BTC/USD.

With a huge number of market makers providing liquidity, there is very little slippage when trading Bitcoin derivatives on BitMEX and Deribit. Altcoin markets also have great liquidity on BitMEX, though not quite to the same degree as BTC/USD.

Cost effective way to hedge portfolio

Since crypto margin trading platforms like BitMEX and Deribit allow users to open short positions, you are able to profit even when the markets are in a downtrend.

By shorting cryptocurrencies with leverage, it is quite possible to make highly profitable trades without needing to risk a large principal amount.

This feature can also be used to help investors hedge against risk, by opening margin positions that will reduce or eliminate any losses incurred due to changes in the spot price.

For example, if you hold a large ETH position that you are expecting to grow in value, you could open a small short position on BitMEX to safeguard your spot position, without needing to front a large amount of capital to do so.

Participate in Margin Funding

Although Bitcoin margin exchanges such as BitMEX are mostly used for short and long trading at leverage, they also provide users with another interesting way to profit — margin funding.

On many crypto margin platforms, including both BitMEX and Poloniex, users can offer up equity to be used as margin funding for customers trading under leverage.

The exact amount you can earn varies by platform but is typically in the order of 0.05% per day before deductions.

Although the gains provided by margin funding can be considered relatively small compared to the potential gains earned from margin trading, the risk is drastically lower.

Since all crypto margin exchange implements strict margin call practices, losing money is very difficult with margin funding, particularly for high volume contracts.

Overall, participating in margin funding is a low risk, low reward investment option, suitable for those with lower risk appetite.

Reduce counterparty risk

One of the major benefits of crypto margin trading is the ability to reduce counterparty risk when making investments since investors need only to front a fraction of their total position size, known as the margin.

Rather than trusting the platform with 100% of the investment, you only need to trust them with the margin value, which means your exposure to risk is greatly reduced.

For example, if you open a $100k position at 100x leverage, you will only need to maintain a $1k balance on the crypto margin exchange, making this the maximum you could possibly lose if the platform is hacked.

The reduced counterparty risk also extends to margin lending. Since the platform will liquidate borrower trades if their maintenance margin falls too low. This essentially removes the risk of margin borrowing defaulting on their position, making lending a safe affair.

Overall, margin trading an excellent option for the risk-averse trader looking to try their hand in the market without risking significant capital.

Conclusion

There are 2 main considerations that you need to take into account when choosing BitMEX or Deribit:

  • Do you need very deep liquidity?

If liquidity is a major concern of yours, then you should choose BitMEX. At the time of writing, BitMEX is the most liquid cryptocurrency exchange out there.

  • Are you a US Citizen?

If you are a US citizen, then you will need to make Deribit your platform of choice since BitMEX does not allow US citizens.

  • Do you want to trade crypto options?

If you want to trade cryptocurrency options, then you will need to choose Deribit since BitMEX does not offer options currently.

  • Do you also want to trade coins other than just Bitcoin or Ethereum?

Deribit currently only offers Bitcoin and Ethereum trading pairs. If you want to trade altcoins like Ripple, Litecoin, EOS, and more, then you will have to make use of BitMEX.

Are there some BitMEX or Deribit alternatives?

Although there aren’t many other crypto derivatives exchanges that can compete with BitMEX or Deribit in terms of volume, there are indeed other options out there.

Some of the most popular ones include:

We wrote a piece reviewing the best crypto margin platforms, so make sure to check that one out for more information.

That’s all for this in-depth review of BitMEX vs Deribit!

Did we miss any important point? Make sure to let us know in the comment section below.

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