For Mucked — BTC Markets
Will write this from the perspective of a US retail trader — things would change if you’re overseas or have access to overseas avenues. Can address that if you have those options. Super high level overview.
Right now, I would say the 3–4 exchanges that “lead” are OKex (OKCoin) in China, Bitfinex and combination of Bitflyer and Bithumb (Japan and Korea). Most all other exchanges follow these 3–4. OKex is known as “the woodchipper” because they love to hunt positions where you can see them diverge from the rest of the ecosystem. I find Bitflyer and Bithumb to act somewhat irrational at times to the upside. Bitfinex, I am finding more and more as they transition to institutional users, will lead down when big money wants price to dump, but doesn’t lead as strongly up (proof of this will be the discount that develops in some, not all, upmoves).
https://coinmarketcap.com/exchanges/volume/24-hour/#USD — this shows you which exchanges have the highest volumes. Bitfinex leads in volume and I think will continue to lead for the foreseeable future.
For US Residents — Spot Mostly
#1 — Bitfinex — just stopped verifying US retail customers because the banking regulations weren’t worth their trouble. They court nothing but large, institutional deposits right now (but see below). Bitfinex “leads” down quite often and it’s my opinion this is because of the type of clientele they are courting now (the moves are just so much more violent). Bitfinex has P2P lending which is very profitable if you can get a good rate locked in due to low supply / high demand. Bitfinex has both margin and spot trading. The other thing to note is Bitfinex is closely tied to “Tether” (USDT) which is supposed to work as sort of a crypto based currency peg to the dollar. There’s a lot of controversy around Tether and there hasn’t been a completed audit confirming 1 USDT for every 1 USD. Issuing of Tether can be seen here — https://omniexplorer.info/default.aspx?filter=grant which gives you an idea of the amount of institutional money flowing into Tether / Bitfinex / crypto in general. Believe a well funded LLC in the US can still get approved, but believe it requires jumping through a bunch of hoops. A British Virgin Islands company.
#2 — Gdax — This is somewhat controversial putting them second, but I’ll explain why. Gdax is the exchange based website for Coinbase where Coinbase is more of a broker dealer. Signing up at Coinbase gives you automatic access to Gdax (use Gdax for lower fees, never use Coinbase). 99% spot trading only, they offered margin to high net worth individuals, but an Ethereum flash crash put the brakes on their margin business. 0% Maker fees which is why I rank them second — it’s a market making bot playground. Recently, have tended to be more bullish on price, even seeing huge premiums between Gdax vs Bitfinex. These premiums, currently, do not get arbed right away and will exist for quite a while (theory — it’s so hard to get USD into Bitfinex, I think some see the guaranteed profit as not worth it to get USD back into Bitfinex. This may all go away shortly with Lightning Network channels between exchanges aka insta-arbs). Clientele is a lot of small retail traders, but we recently saw what happens to Gdax when the market making liquidity leaves the exchange. Gdax almost never leads, but the swings up will generally match the market while moves down won’t be as violent until a) someone arbs the premium away or b) the other exchanges simply catch up. I joke that Coinbase is an arm of the US Government / NSA, but I’m not really joking so you must practice perfect wallet hygiene if you use your coins for #sprots.
#3 — Bittrex — While high on the CoinMarketCap list, think of Bittrex as the US facing gateway to trade altcoins. The interface is awful IMO and not a *real* exchange. However, if you want to speculate in altcoins, this is your on-ramp. Based in Seattle, verification takes like 10 minutes, but you will fully verify.
#4 — Bitstamp — Also known as “Bearstamp” because used to lag the spot market price vs other exchanges. Old school exchange, no margin trading. Bitstamp seems to just follow Bitfinex these days. Some TAers like to chart Bitstamp because it’s a “cleaner” chart, but I think those days are long gone. Others may disagree.
For US residents, if you can’t get on Bitfinex, your best option is BitMex. BitMex is based in Seychelles. Doesn’t take USD deposits, it’s all BTC deposits. High leverage derivatives. This is where most of the bigger day traders trade now, but liquidity can sometimes get spotty. Their mark price is a little weird too as I believe it doesn’t include, or severely limits the multiplier on Bitfinex, the largest exchange, as a residual to when Bitfinex’ price was so disconnected from the market due to US banking issues. They don’t disclose the formula, so this could change at any time once they feel the prices are connected and there’s no premium / discount. Can trade up to 100x leverage. Have to VPN in and not declare where you’re from, but they are super lax.
Once you’re comfortable with how the BTC markets move, I imagine you’ll do almost all your investing here as margin trading appears to be the most profitable for most high IQ traders.