Every day massive fortunes are gained and lost in Bitcoin margin trading. Ever since the good ol’ OkCasino launched their Bitcoin futures back in 2014, trading Bitcoin derivatives has been the favorite past time of most people looking to grow their stacks in the crypto game. While there’s plenty of exchanges to choose from, two are heaps above the others: The old king of the ring Bitmex and the newer challenger Deribit. Let’s take a look at the pros and cons of both and try to determine which one is the superior choice.
It’s probably gonna be a close call, so doesn’t hurt having an account on both. Click the logos below to open your account and you will get a 10% discount on fees, which is very much recommended because while the fees are the necessary evil, a cost of doing business, they do rack up quite a bit and hurt your bottom line, so every advantage should be taken.
The user interface on both exchanges is very intuitive and clean. Everything is very easy to find and figure out and everything functions pretty well. If you’ve ever struggled with trading on Kraken or Bitfinex, you’ll know what I mean. Bitmex wins here because everything on your screen is so easily customizable just by dragging the boxes where you want them to be and the nice little customize menu allows you to easily control what’s on your screen. The dark mode is a must for Bitmex as the bright screen can cause eye strain. On Deribit the bright screen is more pleasing to the eye but the dark mode seems to be the favorite of most traders on both exchanges.
For most users the primary complaint about Bitmex are the system overloads. During high volume times, Bitmex engine gets overloaded and as a result you won’t be able to do anything. If you try to execute an order, adjust your stop, or pretty much anything else, you will get this annoying message:
These overloads don’t usually last very long, sometimes only seconds, but they happen pretty often and during those times all you can do is watch. Bigger problem is that they happen at high volatility times when you might actually want to do something. Also because nobody can enter new orders, the books get very thin and if the price moves a lot, the cascading liquidations may cause the price to over react a lot compared to other exchanges. For example this flash crash we had on May17th 2019:
See how ETH dropped below 200 USD on Bitmex while on Deribit it stopped where the dump stopped, at a much higher price. I’ve seen Deribit have some major lag a few times too when the server load is massive, but in general it’s way more reliable when it comes to this issue.
When it comes to liquidity, nothing compares to Bitmex. Even the heaviest hitters can get plenty of action on Bitmex without moving the price much. Deribit doesn’t have the same liquidity (yet) but for a retail trader like myself, it’s still plenty. I’ve never had a problem with Deribit liquidity as I don’t trade multi million dollar positions. So Bitmex wins, but it doesn’t really matter much unless you trade very large size.
Both exchanges confirm the incoming transactions very fast and credit your account after one confirmation, but the difference in how they process withdrawals is significant. Bitmex processes withdrawals once a day in bulk, and while the reason for this practice is the extra security it adds, it’s annoying to wait for your withdrawal all day. In addition they use low fees and don’t batch their transactions, often clogging the network and causing slight delays in confirmation times. Deribit on the other hand does what every other exchange does.
The withdrawals are sent right after confirmation and you can also set the size of the network fee yourself in case you’re in a hurry. I prefer Deribit in this case but that’s just because I’m not a patient person.
Both exchanges use the same fee scheme. Market orders pay 0.075% and limit orders get a 0.025% rebate. This applies to the whole size of your position and that’s why utilizing that discount mentioned above is pretty much a no brainer.
Deribit only offers Bitcoin and Ethereum products. You can trade perpetual and futures, and they also offer options. On Deribit the margin is cross only, meaning you can use up to 100x leverage, but you will be utilizing your whole account as collateral. While many traders love cross for its flexibility and the fact that you can keep a smaller amount of your stack on the exchange, it also means that if you get liquidated, your will lose your whole account balance. On isolated margin you only lose what you put in the position, so cross is more dangerous. But it’s fun too. Cross is always 100x so when you take a good trade, you can annoy your friends with screenshots of 800% profits.
The biggest advantage with Bitmex is that they offer isolated margin instead of just cross, and they have several altcoin pairs available too. The altcoin pairs sometimes have small liquidity issues and the fees are higher, but for a real degen like me having those around is definitely a plus.
I have never heard of any security issues with either exchange. No hacks, no disappearing balances etc. Both require 2fa and email confirmation on cash outs and you can even set a secure session time so it will log you out automatically if you’re idle for a certain amount of time. Bitmex is a slight winner here because there you can use yubikey as 2 factor authentication, and nothing beats the security of that thing. You can get one here: https://www.yubico.com
To summarize, it’s a close call as predicted. I trade on both and if one didn’t exist, I’d be totally fine with the other, but I’m going to pick Bitmex as a slight winner overall. That easy drag-and-drop customization and the fact that they have yubikey as a 2fa option are enough to earn them that winner’s status.