As spot exchanges reached a large number of users over the last years, margin trading became the next and logical steps for investors to increase their profits when trading cryptocurrency. However, it is not an easy task to select the best crypto margin exchange in the market.
This guide will share with you all the information you should have about margin and the best platforms currently available. You will also know which things you should take into consideration when analyzing a crypto exchange offering leverage.
What is Margin Trading?
This kind of trading involves borrowing funds in order to increase the exposure to a specific trade. In order to keep the position open, a trader should have enough collateral to back the position.
When we trade in the spot market, we usually buy or sell an asset. We can buy, for example, Bitcoin (BTC), and expect it to move higher in the coming months. If the asset moves 5% higher, then our position would register 5% profits. A $10,000 investment in Bitcoin could turn $10,500. If it moves in the contrary direction, we would be 5% lower in our initial investment (-$500).
Margin trading works in a different way. Let’s say that you believe that a specific digital asset would move higher. If you are completely sure, then you would like to increase your exposure to this digital asset.
In the spot market, you can trade with your funds and earn a 5% profit. However, when you trade with margin, you can always borrow funds and get more of the underlying asset. To trade with margin, you will handle, first of all, contracts that follow the price of the underlying asset.
If you buy $10,000 worth of Bitcoin contracts then you can borrow even more funds (some exchanges offer up to 500x leverage) and you could increase your position. With $10,000 collateral and 20x leverage, you can trade with as much as $200,000.
When you trade with leverage, if you hit the right move, you can earn a lot of money. Indeed, in our previous example, if you would have used a 20x leverage on your $10,000 position, you would have earned 5% on the $200,000 borrowed. You would end up earning $10,000 (minus trading fees and borrowing costs).
This is the special thing of crypto margin exchanges when compared with spot ones. Moreover, you can also short a cryptocurrency. But what does it mean?
That you can also profit when the market moves downwards. When you go short, you would be making a profit when the market falls, this is something that you cannot do in the spot market.
How to Pick the Best Crypto Margin Trading Exchange?
Selecting the right crypto margin platform is not an easy task to do. There are many things you should take into consideration before you select a solution suitable for your needs.
Depending on where you are located, you will find different services with a variety of features. Some of these features might fit you but some others not. Thus, there is no perfect crypto trading platform.
When we analyze and search for a crypto exchange offering leverage, we consider many different things including availability in your region, fees, the maximum leverage the platform offers, if their API is available for trading bot use, deposit and withdrawal methods, the pairs available and more.
In the next section, we will share with you a list of the most popular cryptocurrency margin exchanges available in the market. Although not all of them would have the features you are looking for, some of them definitely became very popular due to their very advanced systems.
Top Cryptocurrency Margin Trading Exchanges
This is a list of the top cryptocurrency exchanges in the world offering trading with leverage. Although there are other platforms in the market, these are some of the most popular ones in the crypto industry.
Binance
Binance is one of the favorite platforms for traders and individuals that want to engage with the leverage crypto market. The platform was launched in 2017 as a spot exchange that offers support for hundreds of digital assets and tokens.
Over the last years, Binance became the leading platform for retail investors that want to get access to digital currencies. As it expanded and reached new users, they have also added new services and solutions, including a margin trading exchange to trade crypto contracts.
The Binance futures platform is now among the largest in terms of the trading volume. They are handling millions of dollars from users that want to trade with margin.
This crypto trading platform is available in several regions around the world. This would make it easier for you to get your fiat currencies converted into cryptocurrencies and start trading with margin. Moreover, depending on where you are located, Binance would allow you to deposit fiat currencies, for example, EUR, USD and GBP, among others.
Fees
When we have a look at the trading fees, users pay a maker fee of 0.02% or a taker fee 0.04% if the volume in the last 30 days was less than 250 BTC. As soon as you increase your volume, you can get rebated on the fees you pay.
For example, a person that had a trading volume of 7500 BTC during the last 30 days, would pay a maker fee of 0.0120% and a taker fee of 0.032%. The positive thing about Binance is related to the Binance Coin (BNB) digital asset. Users that hold BNB are able to reduce their fees even further.
Leverage
The maximum leverage is 125x depending on the trading pair and the amount of money you trade. In this way, if you have a position of $10,000 you can trade with as much as $1,250,000. Take into consideration that the larger the leverage, the riskier it is.
In addition to it, if users trade with more than 50 BTC, they become VIP clients. Users have access to additional services offered by the exchange.
Bot Capability
It is worth mentioning that Binance does offer support for third-party services or tools. Users can use their Binance API keys to connect the exchange to the trading bot services. The most popular bot supporting Binance margin is 3Commas.
FTX
Moving forward with the next platform, FTX is a popular exchange for traders that want to have some of the most advanced leveraged tools. It is offering different trading pairs that make it even more attractive to users that want to handle digital assets.
Furthermore, the platform does not only support digital assets but also includes added oil futures contracts and even prediction market tokens. In this way, investors can get access to the most advanced tools to diversify their portfolios.
FTX became very popular in recent months and it is now among the largest margin trading exchanges in the crypto industry. Nowadays, the platform is competing with some of the largest platforms in the space.
Users can deposit and withdraw fiat and cryptocurrencies on this platform. Some of the currencies available include USD, AUD, EUR GBP, HKD and many others.
Fees
The lower the fees are, the easier it becomes for a trader to make profit while trading. FTX follows a common strategy of offering lower maker than taker fees. For a user that has a 30-day volume below 2 million USD, the maker fees are 0.02% and the taker fees are 0.070%.
Leverage
FTX has a maximum leverage of 101x. This is not a standard measure considering exchanges usually have a maximum leverage of 100x, 125x or 500x. Users can adjust the leverage according to their needs.
Bot Capability
The platform is also offering complete REST, Websocket and FIX APIs for users that require them to suit their algorithmic trading needs.
Bitmex
Bitmex is perhaps the oldest and most recognized platform for users that want to use margin trading. The company was founded in 2014 and since then it has been growing over the years offering some of the most advanced tools for cryptocurrency at that time.
In recent years, the platform lost some of its trading volume to other crypto exchanges such as Binance, FTX, ByBit or Deribit, among others. However, the services they offer remain among the best in the space and continue to attract new users.
Bitmex is available in most of the countries around the world but there are some exceptions, for example, in the United States it is not available. U.S. citizens would not be able to use this platform.
The main disadvantage of this platform is related to the few trading pairs it supports. Although in recent years it has added new digital assets, it has a small selection compared to other competitors.
Fees
Bitmex is also working with a differentiated fee for makers and takers. The maker fee is usually close to -0.025% and the taker fee is 0.075%. This makes it easier for the exchange to provide liquidity to its order books.
Leverage
Bitmex’s maximum leverage is 100x for the perpetual Bitcoin contracts. Some other cryptocurrencies have different leverage rates. For example, Litecoin has a maximum leverage of 33,33.
Bot Capability
The platform is also offering REST API and streaming WebSocket API. The information is available in real-time and the APIs are open and complete. In this way, developers are able to build any type of bot application on top of Bitmex, leveraging one of the most recognized trading platforms in the cryptocurrency world.
Bybit
Bybit is a relatively new cryptocurrency exchange that offers derivatives in the cryptocurrency market. The platform was launched in 2018 and it claims to be one of the fastest and most efficient derivatives platform in the crypto market. As they say, they are able to handle as many as 100,000 transactions per second.
This is one of the main selling points of this platform. The main reason behind their focus on efficiency is related to many issues that other companies faced in the past. For example, during periods of large trading volumes, some exchanges such as Binance or Bitmex went down for several minutes and hours in some cases.
Bybit claims to solve these issues and offer the same or even better services than other platforms. The exchange has 12 different pairs that include digital assets such as Tezos (XTZ), Bitcoin Cash (BCH), Ethereum (ETH), Litecoin (LTC), and of course Bitcoin (BTC), among others.
Bybit is available worldwide with the exception of a few countries. Residents of the United States, the United Kingdom, Canada, Singapore, Cuba, Crimea, Iran, Syria, North Korea, Sudan and China are not able to register on the platform.
The platform allows users to deposit BTC, ETH, XRP, EOS and USDT. It does not support other types of deposits. The deposit process is similar to other exchanges and it takes just a few minutes to be done.
Fees
There are some withdrawal fees that are worth taking into consideration, but they are usually very similar to other exchanges. This is a standard thing among trading platforms. However, withdrawal requests are processed three times a day by the platform. As for the trading fees, Bybit takes only 0.05% net from the each transaction.
Leverage
You can use up to 100x leverage when trading at Bybit.
Bot Capability
Bybit API provides information with their REST API and also their WebSocket API. This makes it easier for traders to connect different bot solutions.
Deribit
Deribit is a derivatives cryptocurrency exchange that has been working for several years now and it offers options and futures trading to users. One of the main advantages of this platform is related to its matching exchange. It can process thousands of transactions per second, even during periods of high volume. This offers a much more comfortable experience to users on the platform.
The platform is available in most countries around the world. There are just a few exceptions, including the United States, Panama, Iran, Cuba, Guam and Sudan, among others.
Fees
The fees will also change according to the type of order you open. Maker and taker orders have differentiated fees. Maker fees are currently at -0.01% compared to 0.05% for taker fees on the BTC Weekly Futures contracts. The BTC/ETH Futures/Perpetual contracts have a 0% maker fee and a taker fee of 0.05%. There is also a different fee for BTC and ETH options.
All deposits on the platform are free of charge. The withdrawal fee for ETH is 0.0038 ETH and 0.0005 BTC.
Leverage
The platforms focus on ETH and BTC traded against the US dollar. These contracts can be traded with a maximum leverage of 100x. This is a standard as we have shown in previous platforms.
Bot Capability
Deribit is also providing three different interfaces to access its API. This allows third-party bots to get access to the exchange and integrate it with automated solutions.
Bitfinex
Bitfinex is an old cryptocurrency platform that does not only offer spot trading but also several advanced solutions such as margin trading. The platform is located in Hong Kong and it offers more than 50 different pairs. This is one of the main selling points of the platform.
The exchange supports bank wires and crypto deposits and withdrawals. The fiat withdrawal processing takes between 5 to 10 business days. Crypto withdrawals would also have some fees depending on the amount withdrawn. You can select the fees paid when you withdraw the funds.
Most of the countries are supported with the exception of Bangladesh, Bolivia, Ecuador, Kyrgyzstan and the United States. Other countries could also block the platform if they consider that it does not comply with local regulations.
Fees
Users will pay very similar fees as in other platforms. The exchange is also making a difference between maker and taker fees. Maker fees start at 0.10% and taker fees at 0.20%. The higher the trading volume, the lower the fees paid by users. At the same time, LEO holders will also have an additional discount on their fees.
Leverage
Compared to other platforms, Bitfinex offers lower leverage levels for traders. Earlier in 2021, the platform increased the maximum leverage on the BTC/USD pair from 5x to 10x. This is very low compared to other exchanges that we have reviewed before. Thus, expert traders are able to enjoy margin trading but the potential profits could be lower than on other platforms.
Bot Capability
Bitfinex makes its API available to third parties. In this way, it is possible for users to create customized trading bots and get access to the features offered by the Bitfinex platform.
Kraken
Kraken is a recognized crypto exchange located in the United States that offers its services to thousands of users from all over the world. The platform does not only offer spot but they have also enabled margin trading of up to 5x leverage.
The positive thing about Kraken is that as it is one of the most regulated crypto exchanges in the market, it offers also several on-ramp solutions for users to get access to digital assets. At the moment, the platform is operative and available in most countries around the world.
Fees
Kraken trading fees are higher than the average exchange at 0.16% and 0.26% maker and taker, respectively. Furthermore, the USD/USDT and USDT/USD pairs have a 0.2% fee without differentiating the type of order.
Deposit fees apply only to U.S. dollars ($5) per deposit, Tezos (XTZ) (0.1 XTZ), Melon (MLN) (0.01 MLN) and Gnosis (0.004 GNO). Withdrawal fees vary depending on the digital asset or fiat currency you use.
Leverage
The leverage offered by Kraken would depend on the trading pair you use. All crypto pairs have maximum leverage that oscillates between 2x and 5x. Ripple (XRP), Ethereum (ETH) and Bitcoin (BTC) are the only three digital assets with at least one pair with 5x leverage.
Bot Capability
Kraken is also providing API information through its official site in order for users to get access to advanced features. This is specifically useful for those traders that want to use trading bots and other types of tools.
Conclusion
Choosing the perfect cryptocurrency margin exchange is not an easy task. It is difficult to find an entity that would perfectly cover all your needs. However, the market is large enough to have the solutions you need on different platforms.
Advanced users usually have accounts with different services in order to leverage the best features of each of these platforms. The perfect crypto exchange would be the one that would cover most of your needs rather than covering them all. Selecting a cryptocurrency platform should be done taking into consideration your own parameters.