{"id":234925,"date":"2021-04-25T01:46:44","date_gmt":"2021-04-24T22:46:44","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/3-things-every-crypto-trader-should-know-about-derivatives-exchanges\/"},"modified":"2021-04-25T01:46:44","modified_gmt":"2021-04-24T22:46:44","slug":"3-things-every-crypto-trader-should-know-about-derivatives-exchanges","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/3-things-every-crypto-trader-should-know-about-derivatives-exchanges\/","title":{"rendered":"# 3 things every crypto trader should know about derivatives exchanges"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a27814f45753\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a27814f45753\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/3-things-every-crypto-trader-should-know-about-derivatives-exchanges\/#Open_interest\" >Open interest<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/3-things-every-crypto-trader-should-know-about-derivatives-exchanges\/#Stablecoin_versus_token-margined_contracts\" >Stablecoin versus token-margined contracts<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/3-things-every-crypto-trader-should-know-about-derivatives-exchanges\/#Variable_funding_rates\" >Variable funding rates<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># 3 things every crypto trader should know about derivatives exchanges <\/strong>&#8221;<\/p>\n<div class=\"post-content\" data-v-5a136f3a>In the past two years futures contracts have become widely popular among cryptocurrency traders and this became more evident as the total open interest on derivatives more than doubled in three months. <\/p>\n<p>Additional proof of their popularity came as futures turnover surpassed gold, which is a well-established market with <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.gold.org\/goldhub\/data\/trading-volumes\">$107 billion in daily volume<\/a>.<\/p>\n<p>However, each exchange has its own orderbook, index calculation, leverage limits and rules for cross and isolated margin. These differences might seem superficial at first, but they can make a huge difference depending a traders&#8217; needs.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Open_interest\"><\/span>Open interest<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2021-04\/df2559bf-651d-4dd6-b0a0-82b53f32521c.png\"><figcaption style=\"text-align: center;\"><em>Aggregate futures open interest (blue) and daily volume (black). Source: Bybt<\/em><\/figcaption><\/figure>\n<p>As shown in the above, the total aggregate futures open interest rose from $19 billion to the current $41 billion in three months. Meanwhile, the daily traded volume has surpassed $120 billion, higher than gold&#8217;s $107 billion.<\/p>\n<p>While Binance futures hold the larger share of this market, a number of competitors have relevant volumes and open interest, including FTX, Bybit, and OKEx. Some differences between exchanges are obvious, such as FTX charging perpetual contracts (inverse swaps) every hour instead of the usual 8-hour window.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2021-04\/a8bec82b-bdf8-4aeb-a94c-047cdc553e58.png\"><figcaption style=\"text-align: center;\"><em>BTC and ETH futures open interest, USD. Source: Bybt<\/em><\/figcaption><\/figure>\n<p>Take notice of how CME holds the third position in Bitcoin (BTC) futures, despite offering exclusively monthly contracts. The traditional CME derivatives markets also stand out for requiring a 60% margin deposit, although brokers might provide leverage for specific clients.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Stablecoin_versus_token-margined_contracts\"><\/span>Stablecoin versus token-margined contracts<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>As for the crypto exchanges, most will allow up to 100x leverage. Tether (USDT) orders are usually denominated in BTC terms. Meanwhile, the inverse perpetual (token margined) order books are displayed in contracts, which might be worth $1 or $100 depending on the exchange.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2021-04\/1479abd8-6af5-4a99-92bd-663bf3e6a928.png\"><figcaption style=\"text-align: center;\"><em>BTC perpetual USDT futures order entry. Source: Bybit<\/em><\/figcaption><\/figure>\n<p>The above picture shows that Bybit USDT futures order entry requires a BTC-denominated quantity and the same procedure takes place at Binance. On the other hand, OKEx and FTX offer users an easier option which allows the client to enter a USDT quantity, while automatically converting to BTC terms.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2021-04\/eb92254a-619d-4854-bec0-149296309709.png\"><figcaption style=\"text-align: center;\"><em>BTC perpetual USDT futures order entry. Source: OKEx<\/em><\/figcaption><\/figure>\n<p>In addition to USDT-based contracts, OKEx offers a USDK pair. Similarly, Binance perpetual futures also offers a Binance USD (<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/coinmarketcap.com\/currencies\/binance-usd\/\">BUSD<\/a>) book. Therefore, for those unwilling to use Tether as collateral, there are other options available.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Variable_funding_rates\"><\/span>Variable funding rates<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Some exchanges allow clients to use very high leverage and while this might not pose an overall risk as liquidation engines and insurance funds are in place for these situations, it will pressure the funding rate. Thus, longs are usually penalized on those exchanges.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2021-04\/71d3ef32-6556-44f7-a262-88eecbe1b047.png\"><figcaption style=\"text-align: center;\"><em>ETH futures 8-hour funding rate. Source: Bybt<\/em><\/figcaption><\/figure>\n<p>The above chart shows that Bybit and Binance usually display a higher funding rate, while OKEx constantly presents the lowest. Traders need to understand that there are no rules enforcing this, and the rate may vary between assets or momentarily leverage demand.<\/p>\n<p>Even a 0.05% difference equals 1% in additional costs per week, meaning, it is essential to compare the funding rate every once in a while, especially during bull markets when the fee tends to escalate quickly.<\/p>\n<p class=\"post-content__disclaimer\">The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.\n<\/p>\n<p><template data-name=\"subscription_form\" data-type=\"markets_outlook\"><\/template><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/3-things-every-crypto-trader-should-know-about-derivatives-exchanges\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# 3 things every crypto trader should know about derivatives exchanges &#8221; In the past two years futures contracts have become widely popular among cryptocurrency traders and this became more evident as the total open interest on derivatives more than doubled in three months. Additional proof of their popularity came as futures turnover surpassed gold,&#8230;<\/p>\n","protected":false},"author":1,"featured_media":234926,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDQvMjRjNjRhOGMtNzNlNy00NTcyLWI5ZTAtNzkxMjJkYTIzMTM1LmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74867,74862,74972,74863,74860,75012,75846,79248,73785],"class_list":["post-234925","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-altcoin","tag-bitcoin","tag-bitcoin-futures","tag-cryptocurrencies","tag-cryptocurrency-exchange","tag-derivatives","tag-futures","tag-trading101","tag-markets"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/234925","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=234925"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/234925\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/234926"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=234925"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=234925"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=234925"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}