Bitcoin Derivatives: Futures, Options, Perpetuals Swaps [2020]
Bitcoin derivatives are the newest breed of financial instrument to hit cryptocurrency markets with many traders seeking more information about exactly what Bitcoin derivatives are, and how to profit from them.
We’re going to cover what Bitcoin futures, options and perpetual swaps are, and then dive into a few platforms that provide the best Bitcoin derivatives trading.
Bitcoin Futures
Bitcoin futures are a new type of derivative. Derivatives are just financial instruments which derive their value from the underlying assets, hence where the name comes from.
Bitcoin futures are agreements where a set time and amount of Bitcoin is designated to be traded at a set price. Unlike options, this agreement is a requirement and must be completed.
Bitcoin Options
Bitcoin options are very similar to Bitcoin futures. Both are agreements that include details of a date, price and amount of Bitcoin to be traded.
Where Bitcoin options are different is that the agreement may be optionally executed. That is to say that although the buyer may follow the agreement, they don’t have to.
Bitcoin Perpetual Swaps
Bitcoin perpetual swaps are the third type of Bitcoin derivative that is commonly available.
Bitcoin perpetual swaps are very similar to Bitcoin futures, however the difference is that they are settled in USD instead of being settled in BTC.
Today there are more and more trading platforms launching that provide the ability to trade Bitcoin derivatives, and here are just two of the largest and most well known:
PrimeXBT
PrimeXBT has grown over the recent past to become a leader in the cryptocurrency industry, surpassing many older and more outdated exchanges, to now being the largest multi-asset margin trading platform online.
PrimeXBT lists a wide range of asset classes, including Bitcoin derivatives, as well as other cryptocurrencies like Ethereum, Ripple/XRP, Litecoin and EOS.
As well as crypto-assets, PrimeXBT expanded its offerings throughout 2019 to include a bevy of traditional asset classes such as the world’s leading stock indices, forex pairs, commodities and metals.
The platform provides by far the lowest fees that we’ve found at a flat rate of only 0.05%. In comparison to some of the other major cryptocurrency trading platforms, this can be anywhere as much as 10 times cheaper which has a dramatic impact on profit over the medium to long term.
Deribit
Deribit is perhaps the most specialised Bitcoin derivatives platform, offering exclusive and extensively Bitcoin derivatives.
The great strength of the platform, which launched in 2016, is that listings of Bitcoin futures, options and perpetual swaps are provided here for traders.
The platform has seen its fair share of negative media attention unfortunately however, with reports that Deribit’s support is one of the worst in the cryptocurrency industry, and also covering a wide range of complaints about the performance of the site.
Many sites do have teething problems in the beginning however, and I hope that Deribit are able to deal with these issues to build a stronger brand for themselves and stronger services for their users.
In Conclusion: Bitcoin Derivatives
Bitcoin derivatives are growing in total trade volume every month as more and more trades are chasing ways to increase the profit they make.
These two trading platforms represent the best places in the market for Bitcoin derivatives trading and are certainly worth doing further research into.
