bitmex exchange – Forex Academy

Introduction

Perpetual Swaps, also referred to as perpetual contracts, are essentially a very popular type of futures contract. These contracts are largely dominated by the BitMEX exchange. The XBT/USD has seen to be one of the most popular products offered by them. Bitcoin derivatives, particularly perpetual contracts on BitMEX, were surging of popularity in 2009, in every Bitcoin derivative platform where all of them had record high volumes.

According to sources, BitMEX has a volume of around $2 billion consistently for 24-hour for Bitcoin futures. One of the reasons for this overwhelming volume can be accounted for its high leverage that is provided. For example, BitMEX facilitates 100x leverage on perpetual contracts. So, traders can open positions worth 100 BTC in the futures market with just 1 BTC as margin.

Understanding Futures Contracts on Bitcoin

Perpetual swaps can be considered as a futures contract for Bitcoin where a futures contract is simply an agreement between two parties to buy/sell a security at a particular price and date in the future. The buyer of the futures contract is then required to buy the underlying asset once the contract comes to expiry, and the seller is obligated to deliver those assets to the buyer at the time of expiry.

Futures are said to be a type of derivatives because they are derived from the underlying value of the asset. But perpetual contracts are quite different though they are a form of futures contracts. They are also referred to as “inverse futures contracts.” It is nothing but a standard futures contract, where cash-settlement of the underlying asset can be done without physical delivery.

The reason they are referred to as inverse futures contracts for Bitcoin because the settlement for BTC/USD is accomplished in BTC instead of USD that happens in all other futures markets. As a result, the US dollar is interpreted as a commodity, while BTC is used for the settlement of the contract.

The Benefits of Trading Perpetual Swaps

Well, there got to be some reasons for the skyrocketing volume that is seen in the volume of Bitcoin futures contracts. So, let’s discuss them out.

1️⃣ The uniqueness of the inverse futures contract is that it enables us to trade cryptocurrencies against fiat currencies without really having any exposure to the fiat currency. This type of facility can cut through the regulatory complications involving deposits into the exchange using fiat currencies.

2️⃣ Practically hedging positions in USD by shorting positions is another great exclusive feature in an inverse futures contract for Bitcoin.

3️⃣ As mentioned, every future comes to an expiry. However, the inverse futures contract created by BitMEX does not expire and levy a funding rate at three predetermined times every single day using the negative funding mechanism. The funding payment (size of the position plus the funding rate) is provoked every 8 hours at these specific times: 4:00 UTC, 12:00 UTC, 20:00 UTC.

Conclusion

With the great features offered by the inverse futures contract for Bitcoin, the possibility of institutional money coming into the cryptocurrency market seems to be pretty high, which could hence expand and mature the existing futures market. Also, the no expiration of Bitcoin futures is another for this market to stay tight in the coming years as well.

When looking for cryptocurrency exchange platforms, BitMex is one of the first names you will come across. Also known as Bitcoin mercantile Exchange, this platform boasts of “industry-leading security,” offers 100X leverage, and has no expiry dates for trading. They are also one of the handful of exchanges yet to lose any Bitcoin through hacking and fraud.

Thanks to its robust security and advanced APIs, BitMex has established itself as one of the most reliable exchanges for seasoned crypto traders. But how true are these claims? More importantly, is it safe to trade crypto through BitMex?

In this guide, we take a broad perspective into BitMex, including their exchange platform features, mobile platform, registration, trading, leverage, margin levels, and everything else you need to know before you start trading with the exchange. First, let’s take a brief look at the platform’s background.

What is BitMex?

BitMex was established back in 2014 by HDR Global Trading Limited, which was found by former banking experts Arthur Hayes, Samuel Reed, and Ben Delo. Since its inception, BitMex has morphed into one of the most significant platforms for trading Bitcoin. The Seychelles-based exchange offers a non-conventional crypto trading p platform in that you do not deal with actual cryptocurrencies.

In their stead, investors get to margin trade cryptocurrencies CFDs. Here, you can leverage your trades up to 100 times. However, because of the stringent crypto trading rules in the US, BitMex is not open to US-based traders. The upside of using the Bitmex Platform and its and its margin trading features is that it allows you to make large profits from relatively small investments.

The downside to these leveraged trades nevertheless is the fact that you can quickly lose everything in a relatively short time. BitMex suits traders that know what they are doing. Registration is also straightforward with signup only requiring a valid email address, proof that you are at least 18 years of age.

How does BitMex work?

BitMex offers a derivative crypto trading platform, meaning you will not directly trade the cryptocurrency. To understand how the platform works, we need to review the available contracts:

Futures contract

This is an agreement to buy or sell cryptocurrency at a specified date in the future. The contract also has a predetermined price.

Perpetual contracts

Perpetual contracts are relatively similar to the traditional future agreements. However, there is no expiry date with such agreements.

Upside profit contracts

This contract allows you to participate in the potential upside of a cryptocurrency. You pay a premium on a trade date, which you will receive the profit if the crypto price goes up. Otherwise, no payment occurs.

Downside profit contracts

This is the opposite of upside profit contracts as you get paid if the crypto’s price falls.

The BitMex exchange platform offers various functionalities and widgets you can use to manage your orders and change your viewing preferences. It also allows charting, with the TradingView feature that provides better visibility than virtually all exchanges. Once you make an order, you can view, track, and manage it through Active Orders. BitMex platform is solely available for desktop use, which is understandable considering its complicated interface.

You can trade contracts for different types of cryptocurrencies against other FIAT currencies, including the Japanese Yen, US Dollar, and Chinese Yuan. However, all deposits are to be made using Bitcoin, which also the currency used to represent your profits and losses even when trading altcoins. Once you have loaded your e-wallet, you can then use Bitcoin to purchase other cryptos.

BitMex account registration

BitMex, like many other crypto exchange platforms, has a straightforward registration process. Provided you are 18 years and above and have a valid email address, you can create a free account. BitMex offers two separate accounts: the live trading option – which is available to experienced traders – and a demo account (BitMex Testnet) – a sandbox version of the live trading account – that allows you to try the platform without going live.

Testnet demo account is ideal if you want to learn more about how the exchange works before you begin trading real currency. BitMex is registered in the Republic of Seychelles and offers a global service accessible to everyone who meets their minimum requirements. However, the service is not available in some places, including the USA, Quebec Province (Canada), Crimea, Cuba, Iran, Syria, Sudan, and North Korea. The site does not limit location, but your local laws may affect how you use BitMex services.

Number of cryptocurrencies supported on BitMex

BitMex was founded to give priority to Bitcoin, which was the only trusted cryptocurrency back in 2014. To date, all deposits and withdrawals are only available in Bitcoin. However, the platform supports several other cryptos and FIAT currencies.

This includes Bitcoin and Bitcoin Cash, Ethereum and Ethereum Classic, Dash, Tron, Cardano, Litecoin, Monero, Ripple, Zcash, and Tezos. Bitcoin trades allow both spot and futures trading options. Other cryptocurrencies only provide futures. BitMex focuses on these few options to suit traders looking for highly specific niche platforms that offer leverage on trade.

How to trade on BitMex?

Trading with BitMex is quite effortless once you get the hand of their unique interface. You first need to sign up for an account and make deposits. The minimum deposit you can make is 0.0001BT. There are no other limits on the maximum you can deposit or withdraw. Once you have loaded your account, you can use the dashboard to find the contracts that match your investment needs. There are various features to help you make an order and manage your trades.

BitMex trading fees and charges

BitMex offers some of the most competitive trading fees in the market, considering the chunky profits you can make as a seasoned crypto investor. With a -0.025% marker fee, you can quickly grab little rebates. The taker fee is 0.075%, while the settlement fee is 0.05%.

There are no other fees charged in the platform, apart from the regular Bitcoin network fees calculated from the blockchain load. It is one of the benefits of using this platform compared to others where fees can go as high as 0.25%. Fees for Bitcoin are slightly different from other cryptocurrencies. They charge 1% for the initial margin and 0.5% for maintenance.

Deposit and withdrawal

Deposits and withdrawals are free of charge. You deposit from as low as 0.001 BTC, and there are no other limits. Withdrawals are also pretty fast and available 24 hours a day. What’s more, withdrawals are processed in person at a specific time, which adds an extra layer of security.

You can only make deposits or withdrawals in Bitcoin. Your account balances are also reported in Bitcoin, but you can leverage trades in several cryptocurrencies mentioned above. Unfortunately, BitMex does not allow bank transfers and credit cards.

Security and digital asset protection

BitMex characterizes an exceptional level of security and asset protection with its in-house hand-checked withdrawal system. They also use the underlying index price (not final price) to calculate their margins, making it impossible for frauds to manipulate order books or cause liquidation. They are yet to suffer any hacks or losses since inception.

bitMex partners with Amazon Web Services provide two-factor authentication and trading engine security that can shut down the system whenever the deposit address and private keys don’t match. The platform’s credibility is further guaranteed by the fact that BitMex is an insured exchange that protects your investment even if the site goes down. What’s more, the platform was developed using kdb+, the coding language used by the world’s biggest banks.

Registration and regulation

BitMex is a legal exchange owned by HDR Global Trading Limited, a company that was incorporated under the International Business Company Act of 1994. It is a legit crypto exchange platform that operates under the stringent regulations of existing laws. The service is global but adapts to the unique rules in different places, so you should always review your local laws to know what you can achieve. Since the system has no comprehensive verification process to prove location, it is easy to sign up from anywhere.

BitMex customer support

BitMex uses a standard industry customer support offered through an email ticket. Their site is also packed with resourceful information and an announcement box. There also are a lot of live updates going on in the platform, including a live stream of trader chats. A dedicated support desk answers to your urgent inquiries 24/7 so you are always in good hands. Various exchanges offer better customer support, but you should be able to find any help you seek.

Everything else you need to know about BitMex

BitMex is the most reputable platform offering margin trading options. You can set your desired leverages manually or automatically using the Leverage Slider. Plus, you can also cancel orders at will or choose an iceberg and fill or kill orders.

If you are looking for an easy to use exchange for margin trading, BitMex is definitely one of the best options. Here, you gain access to the leverages as soon as you are done with account creation. Plus, BitMex allows traders to interact with each other via live chat. Not to mention that there are several widgets and tools to help you manage and visualize your trades.

Verdict: Is it safe to trade on BitMex?

BitMex is probably one of the best crypto exchange platforms for those seeking margin trading options. The company has invested a lot towards security and focuses on satisfying a unique niche. They offer a transparent operation with extremely low fees and up to 100 times leverage.

While there are no FIAT deposits or withdrawals, the platform is unique and very secure. It is ideal for seasoned traders who are experienced and know how to navigate margin trading options. With that said, BitMex is a legal, licensed exchange company with real human customer support and viable opportunities for making huge profits.