3 things every crypto trader should know about derivatives exchanges

In the past two years futures contracts have become widely popular among cryptocurrency traders and this became more evident as the total open interest on derivatives more than doubled in three months.

Additional proof of their popularity came as futures turnover surpassed gold, which is a well-established market with $107 billion in daily volume.

However, each exchange has its own orderbook, index calculation, leverage limits and rules for cross and isolated margin. These differences might seem superficial at first, but they can make a huge difference depending a traders’ needs.

Open interest

Aggregate futures open interest (blue) and daily volume (black). Source: Bybt

As shown in the above, the total aggregate futures open interest rose from $19 billion to the current $41 billion in three months. Meanwhile, the daily traded volume has surpassed $120 billion, higher than gold’s $107 billion.

While Binance futures hold the larger share of this market, a number of competitors have relevant volumes and open interest, including FTX, Bybit, and OKEx. Some differences between exchanges are obvious, such as FTX charging perpetual contracts (inverse swaps) every hour instead of the usual 8-hour window.

BTC and ETH futures open interest, USD. Source: Bybt

Take notice of how CME holds the third position in Bitcoin (BTC) futures, despite offering exclusively monthly contracts. The traditional CME derivatives markets also stand out for requiring a 60% margin deposit, although brokers might provide leverage for specific clients.

Stablecoin versus token-margined contracts

As for the crypto exchanges, most will allow up to 100x leverage. Tether (USDT) orders are usually denominated in BTC terms. Meanwhile, the inverse perpetual (token margined) order books are displayed in contracts, which might be worth $1 or $100 depending on the exchange.

BTC perpetual USDT futures order entry. Source: Bybit

The above picture shows that Bybit USDT futures order entry requires a BTC-denominated…

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