With a large number of experienced investors entering the cryptocurrency market, demand for crypto futures started to grow. This has been noted by exchanges that decided to develop solutions to meet this demand.
Nowadays, we have traditional cryptocurrency exchanges offering not only spot trading but also futures trading. In this way, they can offer solutions not only to traders that want to buy and sell virtual currencies but also to those that want to trade perpetual and fixed futures contracts.
📈 What is Futures Trading?
We are used to hearing about the spot market. This is the traditional platform where you can buy or sell the actual digital currencies, speculate with price oscillations, place limit and market orders, and more.
However, the spot exchange is too simple for advanced traders that want to execute complex trading strategies and gain exposure to cryptocurrencies without actually purchasing the underlying asset.
At the same time, in general, with futures exchanges, users can open long and short positions. In the spot market, if we bet the price of an asset is moving downwards we can only sell the token and purchase it again once it reaches the price we supposed it could reach.
With the futures market, traders could open short positions and profit with the virtual currency moving downwards. When we trade in the spot market that’s not possible. We need to sell the real asset if we have.
When we handle futures contracts, we need to know that we are not purchasing the cryptocurrency itself, but we are buying contracts that derive their price from an underlying asset. This is why these contracts are called derivatives because their price derives from a digital asset.
In a simple and fast example, if we trade Bitcoin perpetual contracts, we are handling a derivative contract that derives its price from Bitcoin. But bear in mind we are not handling actual BTC coins.
Furthermore, another positive thing that we should consider before we continue with the article is related to leverage. When we trade in the futures market or with futures exchanges, most of them offer investors the possibility to increase their exposure to a specific trade.
This can be done by borrowing funds from a third party. In this way, you can trade with as low as 2 times your initial investment and increase your exposure to as much as 125x in some platforms. Nevertheless, trading with leverage is very risky and is not advised for newcomers.
🤷 How to Pick the Best Crypto Futures Trading Exchange?
Nobody said that picking the best crypto futures trading exchange is an easy thing to do. The solutions offered by these platforms are certainly diverse and different from each other. This is why you want to carefully analyze the features offered by each of these platforms to properly decide which exchange you want to use.
Another thing you should also take into account is related to the location of the platform. Not all exchanges are available in your region. This can be related to regulations, laws and other types of constraints exchanges could face.
Furthermore, understanding the trading, withdrawal, and deposit things is also definitely important. The larger the fees, the lower your profitability. You want to make sure you select a platform that is certainly cheap to use and that does not charge high fees.
Finally, you should check whether the exchange has the pairs you want to trade (for example BTC/USDT) and if it has an API that is available for third parties including trading bots. All these things would help you decide which is the exchange you really want to use.
🔝 Top 8 Crypto Futures Trading Exchanges
The following is a list of some of the best crypto futures trading exchanges available in the market. You want to make sure to select those that have the solutions you need and that would make it more profitable for you to trade futures contracts.
The first one on our list is Binance Futures. The popular cryptocurrency exchange has been evolving over time and it is now offering futures trading. Binance is offering not only perpetual futures contracts but also quarterly futures contracts for more advanced traders.
The exchange is known for being one of the largest if measured by trading volume. According to data provided by CoinMarketCap, Binance handled more than $48 billion in trading volume for its derivatives segment.
In order to make it easy for users to start trading in the futures market, Binance is already offering a wide range of fiat deposit methods. This makes it easier for users to deposit the funds they need in order to execute their trading strategies. Furthermore, Binance has made its API available to third parties.
Users that hold Binance Coin (BNB) tokens are entitled to discounts on their trading fees if they pay them using BNB tokens. This is one of the favorite features of the Binance crypto exchange for traders in the Futures market.
OKEx is another cryptocurrency exchange that is currently offering futures contracts. This is a logical second option after Binance due to its large trading volume ($12 billion in the last 24 hours).
OKEx is an internationally known cryptocurrency exchange that is offering spot trading and also futures trading. The platform has a very easy-to-use interface and it offers a fully customizable Bitcoin and cryptocurrency service.
This exchange claims that it is now operating in more than 200 countries around the world and it has more than 400 trading pairs, making it one of the largest in terms of possibilities for trailers. However, the number of trading pairs for the futures exchange might be actually lower.
At the same time, OKEx has more than 20 million users and 24/7 online support for its clients. The most popular cryptocurrencies traded on the Futures Market for OKEx include Ethereum (ETH), Bitcoin, Dogecoin (DOGE), and Litecoin (LTC). Some other virtual currencies such as Polkadot (DOT) or Kusama (KSM) are also supported.
Located in the United States, Kraken is among the most useful exchanges for traders thanks to the clear regulatory framework where it operates. The platform has been offering futures contracts for a while and it is handling a trading volume of almost $280 million per day.
The leverage level you can use on the Kraken exchange would depend on the type of contract you are trading and the virtual currency that you have selected. Users that trade futures in Kraken would pay a maker fee of 0.02% and a taker fee of 0.05% of their 30-day trading volume is lower than $100,000.
For users that trade more than $100 million in volume, the maker fees go down to 0% and taker fees are just 0.01%.
Kraken is considered to be an extremely safe virtual currency exchange as it has been operating since 2013. Additionally, it is registered in the United States and supports several fiat currencies.
As you can see, most of the virtual currency exchanges have already released a futures trading option, and Bitfinex is not outside of this trend. This recognized crypto exchange is focusing on what users need, including a spot exchange, margin trading, and of course, futures trading contracts.
One of the positive things about this exchange is the possibility to deposit fiat currencies through bank wires. At the same time, users can easily withdraw their funds to their bank accounts.
Compared to other exchanges, the platform has very similar trading fees. For example, maker fees are 0.10% per trade and taker fees are equal to 0.20% per trade. In addition, the platform has made its API available for those users that want to use other types of solutions on top of the exchange.
Bitfinex is an exchange that is already available in most countries around the world. This makes it easier for users in different regions to get access to crypto futures.
KuCoin is a popular cryptocurrency exchange that focuses on privacy. The platform wants to make it possible for every user to trade virtual currencies without going through lots of KYC and AML procedures. Although there are some KYC and AML regulations in place, the exchange tried to avoid them until it was difficult for it to keep operating in different jurisdictions.
KuCoin is also a platform with a large number of trading pairs. It is very easy for users to trade using this platform and to get access not only to the spot market but also to futures contracts. Nowadays, KuCoin is one of the largest crypto exchanges in terms of volume for futures (even larger than Kraken or Deribit).
Although the platform was hacked once, the situation didn’t create problems for the platform and users were able to continue with their trading activities. Nevertheless, KuCoin has one of the lowest fees in the market for users thanks to the KCS token (KuCoin Shares).
ByBit was created as a cryptocurrency exchange to compete against BitMex and offer better services for users that wanted to have access to futures trading. Individuals can trade with leverage and get access to some of the largest volumes in the market.
Most of the countries around the world are supported by ByBit. That means that most of the jurisdictions will get the possibility to trade using the ByBit exchange. Just a few locations are not supported.
This robust exchange supports several virtual currencies such as Bitcoin, Ethereum, Litecoin, XRP, Bitcoin Cash, Link, among others. One of the positive things for traders is that they can create a limit order with negative fees (you get paid for it once it gets executed). The fee is now at -0.025%. Meanwhile, taker fees are 0.0075%.
It is also worth mentioning that the exchange is very intuitive and it has one of the fastest execution times in the crypto industry. The main goal was to become much more reliable than BitMex when it was still one of the largest futures exchanges available.
This is a relatively new cryptocurrency space that became a popular trading platform for users that want to trade crypto futures. Although the platform could have experienced a large expansion in recent months, there are some claims that show that this exchange uses wash trading in order to increase its volumes.
But let’s focus on the features that it offers. Users can easily borrow and lend funds and trade derivatives in the crypto market. The positive thing about this exchange is that it has made it very easy for users to trade the pairs they want and the coins they like the most.
Furthermore, the platform seems to be offering most of its services to Asian clients, including China. Regarding its security level, they claim some of the funds are stored in cold storage wallets. This is definitely important considering that exchanges are one of the main targets for hackers. Despite this, the exchange has never been hacked yet.
Bitmex is the last of our crypto futures trading exchanges. The platform is one of the oldest offering derivatives for the cryptocurrency market. Since the beginning, they have traded Bitcoin and cryptocurrency contracts rather than spot. This is why the platform was a pioneer in terms of services offered to users.
Over the last years, BitMex was a leader in terms of trading volume and services offered to users. However, with the expansion of other platforms, BitMex became less and less prominent. This exchange has been affected by some performance issues that pushed traders to search for other platforms to trade digital currencies.
Despite that, BitMex offers competitive fees and the security users need to be sure their funds are protected. Nowadays, the platform is among the largest in terms of trading volume, but it has been surpassed by other exchanges such as Binance and OKEx, among others.
If you want to trade Bitcoin and crypto derivatives, Bitmex is one of the most recognized platforms out there.
📢 Final Words
All of the exchanges listed above are great choices for you to start trading crypto futures. You should select the exchanges that would be available in your country and get the necessary knowledge before you start trading cryptocurrency futures. Trading in this market and using leverage is certainly risky.