Until recently there were no major platforms offering bitcoin leverage trading products but one – BitMEX. Recently, however, the idea of having leverage in crypto markets and its relevant pairs such as BTCUSD, ETHUSD and XRPUSD caught up to other entrepreneurs and already existing giants in the crypto industry who in their turn scaled further by offering it to their huge user bases.
The newer Bitcoin margin trading platforms quickly gained traction. They overcame previously existing problems such as lags, overloads and security issues. This has, in turn, paved the way for margin trading exchanges to become a normal offering with some of the exchanges even extending the boundaries to x200 leverage.
The best bitcoin margin trading platforms offering leverage on the market as of today are:
ByBit is a new-gen trading platform created in 2018. It quickly gained traction over the summer of 2019 and shot itself all the way to the second largest platform specializing in margin trading.
Key features of Bybit:
Bybit is a registered company in the British Virgin Islands with its main headquarters located in Singapore. At the moment it can be used worldwide except for countries with unclear regulations and sanctioned countries such as: USA, Québec, Singapore, Cuba, Crimea, Iran, Syria, North Korea, Sudan, and China.
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Founded in 2016, Deribit has been around in the industry for a while now. With a solid and very loyal user base, low fees and one of a kind product offering, Deribit is a very solid choice among traders who prefer quality over quantity.
Key features of Deribit:
The team at Deribit aims to provide a unique high-quality leverage trading exchange while sticking to the values that are the main drivers of its success (Integrity, Quality of Service, Innovation).
Deribit restricts residents of the following countries: Québec, Guam, Iran, Iraq, North Korea, Panama, Puerto Rico, Samoa, Sudan, SAR, United States, Virgin Islands (U.S.)
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Bitmex is the biggest platform within the leverage niche. It became overly popular during the bear market of 2018. This derivatives exchange holds the record for the highest volume BTC traded in 1 day – 1 million BTC. The CEO is Arthur Hayes who together with Ben Delo and Samuel Reed founded Bitmex in 2014.
Key features of Bitmex:
Bitmex has one of the most expensive offices in the world located in Cheung Kong Center’s 45th floor. The exchange is not regulated by any major regulatory entity and operates in the gray area. It does not accept users from the following countries: the United States, The province of Québec in Canada, Hong Kong, China, Seychelles, Bermuda, Cuba, Crimea and Sevastopol, Iran, Syria, North Korea or Sudan.
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Since 2017, Binance grew to be the behemoth in the crypto industry during the years. It kept on introducing new trading instruments and options to its ever-growing user-base. Binance is one of the few exchanges where you can trade a tremendous number of assets with a very high leverage.
Key features of Binance:
Changpeng Zhao, the CEO of Binance is a prominent figure within the industry. The constant push for innovation from Binance is what paved the way for it to take the first place for daily spot trading volume in the crypto space. Binance’s headquarters are located in Malta while having multiple offices in different countries.
Kraken is one of the longest-standing bitcoin exchanges in the industry. Recently they introduced futures trading for 5 cryptocurrencies with up to 50x leverage. To get access to the futures trading part of Kraken you need to pass level 2 of their KYC, otherwise, you will not have access to it.
Key features of Kraken:
Kraken is regulated by FinCEN in the USA and FINTRAC in Canada making it one of the few regulated exchanges in the crypto industry that offer fairly high leverage trading. The exchange’s headquarters are located in San Francisco, USA.
One of the most famous bitcoin exchanges, owned and operated by iFinex, Bitfinex provides its services to crypto enthusiast since 2012. Besides spot trading and margin trading with low leverage, Bitfinex added to its portfolio derivatives trading of Bitcoin and Ethereum, trying to take a portion of the ever-growing derivative market.
Key features of Bitfinex:
Bitfinex is headquartered in Hong Kong and registered in the British Virgin Islands. Since August 15 of 2018, US customers are no longer accepted on the exchange due to the US regulatory requirements.
Huobi was founded by Leon Li in Beijing, China, 2013. The exchange invests heavily in its security framework throughout the years, building robust internal security practices to keep user funds protected from malicious attacks.
Key features of Huobi:
Due to China’s negative stand towards cryptocurrencies like Bitcoin, Huobi relocated its headquarters in Singapore. It also has offices in the United States, South Korea, Japan, and Hong Kong.
The idea of bitcoin margin trading stems back from traditional markets where you would need a very big starting capital in order to turn a decent profit by trading large quantities. Leverage was introduced in order to minimize the entry barrier and make it possible for retail investors or newcomers to try it for themselves. It essentially means to “borrow” funds from the exchange and trade with it. This provides a way bigger exposure to both profits and losses.
For example, for every $1 you’re trading with, using x100 leverage would give you the power to trade with $100. Compared to spot trading where $1 would have a purchasing power of $1.
Unfortunately, this goes for the other way around since for every trade you’re facing a liquidation price.
If your trade goes in an unfavorable way, your available margin will drop. It must be filled up in time to keep your positions open and avoid possible liquidation.
Always make sure your broker has adjustable leverage. Going above 1:10 (10x) is not recommended as the liquidation price will be much closer to your entry price level and you might end up getting a margin call, which will automatically close your positions at a loss.
Some trading platforms such as Bybit and Bitmex have a “paper trading” or “testnet” functionalities, allowing users to first try out the platform with demo (virtual) funds before depositing the minimum required amount in order to execute real-life trades. These “testnets” are a great way for you to check out what leverage trading is about with virtual Bitcoin before risking any real capital.
When getting into real trading, make sure you know what you’re doing. It is NOT recommended for new traders to use leverage.
Trading bitcoin with leverage is a very lucrative and profitable, yet very dangerous endeavor.
Leverage trading, in general, is quite risky especially in crypto markets due to the high volatility and the relatively low market capitalization making it easier for your trades to go the other way around. It is even possible for bigger players to constantly cause price swings.
When using leverage, you’re exposed to a loss of capital due to the ever-active liquidation price.
The high volatility of the crypto market, apart from being dangerous, proves to be very attractive to seasoned traders who can take advantage of the green market. The instrument itself requires less capital in order to be used to its full potential. This, however, doesn’t change the fact that leverage trading carries greater RISKS. Never invest or trade with more than what you can afford to lose.
Bitcoin leverage trading exchanges carry risks, especially if you are unfamiliar with how margin works, long and short positions, etc. It is best to tread carefully. Leverage can be a powerful tool when used properly, however, if not handled properly, it can lead to unimaginable losses in a very short time. Learning how to use these instruments correctly in these types of exchanges can be very beneficial in the long run.
New margin trading platforms are emerging almost daily, as leverage is currently a very desirable product. For a newcomer, it is better to choose from the most reputable crypto exchanges, as they offer already tested environment and instruments and have built some reputation. Risking your funds on newer exchanges may be risky due to the ever changing market conditions since the exchange might disappear overnight.