The is an absolute stampede of trading moving into trading Bitcoin derivates, and moving away from the more traditional model of buying and selling the underlying cryptocurrency itself.
We’re looking at what Bitcoin derivatives are, how you can profit from them and the best places to trade Bitcoin derivatives.
What are Bitcoin Derivatives?
Bitcoin derivatives are agreements for traders to purchase or sell Bitcoin at a predetermined time and price in the future.
Derivatives allow traders to trade Bitcoin without having to hold the underlying asset itself.
There are a number of types of derivatives including futures, which require the transaction to take place, and options, which allow the option for the agreed trade to take place.
How Can Profit be Made on Them?
Like with “normal” trading, profit can be generated by correctly predicting future price movements of Bitcoin.
If you create a Bitcoin future that says that you will buy 1 BTC in one week at a price that is $500 higher than it is today, but Bitcoin’s price grows to being $1000 higher, you will make an instant profit of $500.
Where Can You Trade Bitcoin Derivatives?
PrimeXBT
PrimeXBT is a popular margin trading platform that provides cryptocurrencies and CFDs on forex pairs, stock indices and commodities.
PrimeXBT’s exponential growth over the past 12 months has been as a positive response to the types of new products that the platform has provided for the market.
This is coupled with PrimeXBT having the lowest fees of any of the margin trading platforms that we looked at, as well as having a succinct registration process that isn’t bogged down with KYC and only requires an email.
The platform’s trading engine is powerful, executing trades on average at under 7.12ms, and its interface is designed to be easy to use and easy to understand for novices and pro traders.
Deribit
Deribit was launched in 2016 and offers a wide range of Bitcoin derivatives products.
The platform allows for trading Bitcoin perpetual swaps, options and futures, and although the user interface is somewhat confusing and dated, traders can access opportunities to trade derivatives on Deribit.
The user interface is not the worst we’ve seen, but could definitely do with some modernisation. Saying this, Deribit has forged a niche within the cryptocurrency market as it is one of only a few platforms to provide Bitcoin options.
In Conclusion: Bitcoin Derivatives Stampede
Bitcoin derivatives present one of the most exciting opportunities in all of cryptocurrency today.
The flexibility of these instruments allows for traders to profit in new and more sublime ways, and has fuelled an explosion of growth within crypto markets over the past few years.
Check out these platforms and take a look at the services and products provided, as well as the easy of use of these platforms for all traders.