Cryptocurrency derivatives: top exchanges for trading cryptocurrency derivatives


Cryptocurrency derivatives are a newly emerging type of financial product. Today the crypto market is a vast ecosystem of more than two thousand tokens and coins. Moreover, each of them is focused on a specific project based on blockchain technologies. But some developments are truly innovative products – for example, cryptocurrency derivatives, of which Bitcoin futures is the most famous. The editorial staff of examined the principle of their work in more detail.

The best cryptocurrency exchanges for derivatives trading:

  1. Binance.
  2. Bybit.
  3. Bitmex.
  4. Currency.
  5. Deribit.
  6. PrimeXBT.
  7. StormGain.
  8. Huobi.

What are cryptocurrency derivatives

A derivative is a financial contract between two or more parties, the value of which is derived from the value of the underlying cryptocurrency. More specifically, it is a contract regulating the purchase or sale of an asset in the future at a specific price.

Derivatives themselves have no value. Their value lies in what price movements await cryptocurrency in the future. There are three main options for such contracts – swaps, futures and options, which will be discussed in more detail below.

Reasons for using derivatives

Derivatives provide a number of advantages for modern financial markets, which is why they are becoming more and more popular every day:

  1. Determining the price of the base cryptocurrency. For example, the cost of futures can be a reflection of the most accurate price of a commodity.
  2. Risk hedging. An investor can buy a derivative whose value moves in the opposite direction from the value of the cryptocurrency the investor is holding. Consequently, the profit from the derivative is able to smooth out the losses on the underlying asset.
  3. Providing access to inaccessible markets or assets. With the help of contracts, organizations can gain access to those trading platforms or currencies that, for one reason or another, are not directly available to them.
  4. Improving the efficiency of markets. It is generally accepted that trading cryptocurrency derivatives helps to improve the efficiency of financial markets. Contracts provide the ability to repay assets. Therefore, equilibrium is ensured between the value of the underlying asset and related derivatives.
  5. Volatility protection. The main reason for the existence of derivatives is that legal entities and individuals want to reduce the level of risks for themselves and build protection against strong price fluctuations.
  6. Speculation. Among traders, cryptocurrency derivatives are in great demand, as they allow them to profit from changes in the exchange rate.

Such contracts also have a number of shortcomings, largely due to which the financial crisis occurred in 2007-2008, even before the advent of cryptocurrencies. This is the high volatility of the derivatives themselves. They are difficult to assess, so the risks remain quite high. Also, due to exposure to speculative features, there is a risk of large losses in case of unreasonable use. Finally, there is the possibility of default by counterparties, since not all contracts on trading floors are properly verified.

How to make money trading derivatives

Traders’ income is carried out depending on the price fluctuations of the cryptocurrency of interest. All traders are partly at risk, because no one can know exactly what the value of the currency will be in the future. If the asset has become more expensive, that the buyer wins, if it gets cheaper, then the seller earns.

To increase the level of his earnings, a trader can use leverage (leverage). Leverage multiplies the potential profit. The available leverage depends on the selected trading platform. Also, you will need to pay a commission for the loan funds.

Derivative types

There are hundreds of contract variations on the market, but they can all be divided into three main categories.


A futures derivative regulates the sale of an asset based on future data, but at a price already determined. Such agreements are actively quoted on cryptocurrency exchanges, while the site acts as an intermediary. As with any contract, it is impossible to change the terms after its conclusion. Exchange contracts are drawn up:

✅ in specially defined volumes;

✅ in a specially defined form;

✅ for a certain period of validity.

Also, the exchanges usually practice a daily reporting procedure, that is, all income and losses on derivatives are settled on the day they are received. This minimizes credit risks. It should be noted that in working with futures, the seller and the buyer enter into contracts not with each other, but with the exchange.


The principle of options is significantly different from futures. While in a futures both parties to the contract are required to buy or sell on a specific date, an option contract is asymmetric. An option contract binds one participant, and allows another to make a decision later when it expires. Consequently, the privileged party with the choice pays some fee for this.

There are two types of options: call option and put option. The first gives the right (but does not oblige) to purchase cryptocurrency at a given price at a later time, and the second – to sell at a predetermined price. Options, like futures, are traded on cryptocurrency exchanges.


Swaps are considered the most difficult market instruments to learn. Such derivatives give participants the opportunity to exchange their financial flows. One party can transfer the cash flow to the other party. The most common example of this is changing a fixed interest rate to a floating one. Also, traders can make decisions about the base cryptocurrency swap or interest rates.

Companies like to use swaps – it helps them to reduce the level of monetary risks. Typically, such derivative contracts are concluded between individuals without using the services of an exchange. Investment banks can act as intermediaries and take risks.

Cryptocurrency exchanges for derivatives trading

Here is a brief description of the exchanges that allow you to trade cryptocurrency derivatives – their terms and trading products.

Bitmex Exchange

Professional traders and investors often choose to trade Bitcoin derivatives through the Bitmex platform. Well suited for those who already have experience with classic finance. Offers high leverage and powerful security protocols.

The supported type of derivative is futures, which are settled either in cash or in physical assets. Contracts do not require traders to place 100% of the collateral as a margin, therefore it is possible to use leverage up to x100 on some contracts.

On BitMEX, margin is expressed only in Bitcoins, so traders can only speculate on the future asset price with BTC.

In addition to futures, the exchange supports such a derivative as perpetual contracts. Using it, you do not need to adjust the time of the transaction to the expiration date of the contract. The quotes used in this tool are the same as the quotes in the spot market.

ByBit Exchange

Bybit is a cryptocurrency derivatives exchange that offers a fairly convenient and secure interface for exchanging both traditional and digital currencies. Among derivative instruments, perpetual contracts stand out here, which do not require immediate settlement. They provide hassle-free trading, allowing clients to hold positions for a long amount of time. Thus, there are even more opportunities for income generation.

Deribit exchange

It is stated that on Deribit Bitcoin options are traded according to the “European” method, that is, they can only be exercised after expiration. This is in contrast to American options, the exercise of which is available at any time during the term.

There is a fairly common misconception that options can only be sold on Deribit after expiration. But in reality they are not, and the fact that they are “European” does not matter.

Deribit futures offers are available to everyone regardless of country of residence. Advantages include tight spreads, leverage and fairly large trading volumes.

Huobi Exchange

In November 2018, the Huobi exchange introduced a new platform Huobi DM, where it became possible to open long or short positions on the volatility of cryptocurrency rates and thereby receive income. The platform allows you to work with contracts valid for 1 week, 2 weeks or a quarter.

Huobi DM also launched USD-denominated BTC derivatives trading.

Xena Exchange

The exchange is focused mainly on large companies and provides an opportunity to sell or buy derivative contracts. Corporate clients get a personal manager, improved security features, reduced commissions. A wide range of trading functions and tools are available.

The platform offers up to 20x leverage. But the main feature of the exchange is a wide selection of unusual assets. For example, swaps for mining difficulty, volatility, perpetual swaps, etc.

Okex Exchange

The exchange offers different types of derivatives and even was in the lead in terms of their total volume in March 2019. The bulk of transactions belong to Bitcoin futures. Their peculiarity on OKEx is that they are calculated only in BTC, and the value of the contract is expressed in dollars. There is also a special proof-of-manipulation system.

Delta Exchange

Now on this cryptocurrency platform, you can trade several types of futures. Soon they promise to add more options.

All contracts have built-in leverage. The maximum allowable leverage is 100x, although for some contracts this indicator may differ downward.


Although in 2007 derivatives became one of the main factors in the formation of the global crisis, they still belong to the most important risk management tools. When cryptocurrency exchanges started launching the ability to trade them in 2017, the community was very excited. It is clear that this type of market is necessary to keep the financial system dynamic and also helps to raise awareness of cryptocurrencies in the mass market. But at the same time, derivative contracts are quite complex, you need to be very careful when using them.

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