BitMEX vs Deribit. 2019 Review.
Based on FX Empire and Bitcoin Exchange Guide News Materials
BitMEX and Deribit are two of the largest cryptocurrency exchanges offering Bitcoin perpetual swaps. Initially, Bitcoin perpetual swaps were only available on BitMEX. In August 2018, Netherlands-based Deribit launched its own perpetual swap pair.
Today, BitMEX remains the world’s largest bitcoin futures and derivatives market by trading volume. The annual notional Bitcoin trading volume on BitMEX is close to $1 Trillion. Deribit, meanwhile, just rose into the top 10 biggest crypto exchanges.
There are significant differences between BitMEX and Deribit. While BitMEX has a first-mover advantage, Deribit is also worth considering for trading Bitcoin with high leverage. Keep reading this article to find out which exchange offers the best futures and derivatives market for traders.
What is BitMEX?
BitMEX, or Bitcoin Mercantile Exchange, is a cryptocurrency exchange founded in 2014 by HDR Global Trading Limited. The exchange is known for its highly-leveraged (up to 100x) margin trading, including bitcoin futures contracts and perpetual swaps.
Today, BitMEX is the most liquid bitcoin derivatives exchange. Its trading volume is nearly twice the 24 hour trading volume of the next closest competitor, Binance. The high liquidity means tighter spreads and the least amount of slippage when executing market orders.
What is Deribit?
Established in 2016, Deribit is an online platform that specializes in futures and options on Bitcoin. In fact, the name of the platform “Deribit” is derived from the words “Deri for Derivatives” and “Bit for Bitcoin”. Deribit is based in the Netherlands and its platform is open to traders from all over the world.
The platform offered by Deribit is available for trading both the futures and options markets. A web-based platform, it is geared towards more experienced traders rather than beginner traders.
What’s the Difference Between Perpetual Swaps on Deribit and BitMEX?
BitMEX and Deribit are competing against each other in a number of different ways. Options and futures traders, however, may be particularly interested in the differences between the way the two exchanges handle perpetual swaps.
The first and biggest difference between perpetual swaps on Deribit and BitMEX is the way the pairs are calculated. BitMEX calculates payouts every eight hours, while Deribit calculates payouts continuously.
BitMEX
BitMEX’s perpetual swaps work during an eight-hour period. During this eight-hour period, the system performs a time-weighted traded price versus a spot price representation. If the pair is at a premium, then traders in the long position pay traders in a short position, which makes going long less attractive and reduces the premium. If trading is at a discount, then traders in a short position pay traders in a long position, which attracts buyers and raises the price.
BitMEX recalculates this price every 8 hours. At 12:00, 20:00, and 4:00, BitMEX makes the payout between longs and shorts. Because of this interval payout feature, traders can jump in just one second before the scheduled payout and exit one second later and still receive payout.
The goal of BitMEX’s perpetual swap system is to provide the benefits of a futures contract without the annoyance of expiration. The main weakness, of course, is the interval gap payout of cash flow.
Deribit
Deribit’s perpetual swaps work differently. On Deribit, payouts are made continuously instead of at the end of the interval. The perpetual swaps system itself is similar. However, instead of clearing a payout every 8 hours, active positions receive continuous payouts based on the premium or discount versus the spot price. That means as soon as you enter the position, you’ll start receiving (or paying) a cash flow from (or to) the other side.
The benefits are obvious.Deribit’s perpetual swaps lead to a much smoother adjustment mechanism between periods where the contract deviates (i.e. a premium or discount) from the underlying spot price.
BitMEX Versus Deribit: Other Differences
Liquidity
BitMEX is the most liquid bitcoin derivatives exchange. That means BitMEX has the tightest spread and the least amount of slippage when executing market orders. For comparison, BitMEX does about 400,000 BTC of trading volume per day, while Deribit does about 10,000 BTC. BitMEX is the number one crypto exchange by volume, with the impressive $1 Trillion annual notional trading volume. Deribit, meanwhile, just entered the top 10 exchanges by the trading volume size.
Futures Contracts
Deribit and BitMEX both offer similar futures contracts. In fact, the two exchanges are identical in terms of futures contracts now that Deribit has added perpetual swaps. Both exchanges also offer monthly futures contracts.
Leverage
Both BitMEX and Deribit offer up to 100x leverage.
Options
Deribit offers a wider range of option contracts than BitMEX, including strikes with long expiration dates.
Fees
Deribit and BitMEX both offer very similar fees. For perpetual swaps, Deribit has a maker rebate of 0.025% and a taker fee of 0.075%. For futures, Deribithas a maker rebate of 0.02% and a taker fee of 0.05%. Deribit charges a delivery fee of 0.025%. BitMEX, in comparison, offers a maker rebate of 0.025% and a taker fee of 0.075% along with settlement fees of 0.05%.
Security
While most crypto exchanges platforms require their users to be registered and verified before they can start trading on their platforms, both BitMEX and Deribit do not have any such requirements. Users of these platforms merely have to register to open their account and they can immediately transfer BTC to their account and start trading. The reason why BitMEX and Deribit do not require any verification is that their platforms deal solely in Bitcoin.
Deribit keeps 90% of Bitcoins in a cold storage, while BitMEX stores all Bitcoin in a cold multi-signature wallet. It is a Bitcoin wallet, stored offline that requires several signatures in order to spend any funds. In the case of BitMEX, it requires 2 of 3 authorized persons to sign any transaction before funds may be spent.
How to Start Trading on BitMEX and Deribit?
Open privileged BitMEXaccount using the link below and pay less trading fees:
https://www.bitmex.com/register/Q1nfNX
Open privileged Deribitaccount using the link below and pay less trading fees:
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