Bitcoin Futures: What’s your best option?

The emergence of derivative products like Bitcoin futures can indicate that a market is growing. Futures give traders more alternatives to hedge risk, engage in price discovery, and speculate. Today, more platforms than ever allow trading of Bitcoin futures. Let’s take a quick look at some of the options and see if any stand out.

US-based

• Cboe

Cboe began trading Bitcoin futures in December 2017, right around Bitcoin’s all-time high. One Cboe Bitcoin futures contract represents one bitcoin. Cboe Bitcoin futures are settled in fiat (based on the Gemini auction price), which means that upon expiration, a successful trader will receive USD, not bitcoin.

• CME

CME, the world’s largest futures exchange, opened trading on Bitcoin futures just a week after Cboe. A single contract represents five bitcoins. Like Cboe, CME settles its Bitcoin futures in USD, not bitcoin. The trading volume of Bitcoin futures on both Cboe and CME has been relatively modest so far.

• Nasdaq

Nasdaq, the world’s largest stock exchange, plans to partner with investment management company VanEck to launch Bitcoin futures sometime in early(ish) 2019. Details about Nasdaq’s launch date are scarce, but reports of Nasdaq job postings seeking blockchain specialists suggest that the renowned exchange is pushing ahead with its plans. Nasdaq has indicated that its Bitcoin futures will be settled in bitcoin.

• Bakkt

Bakkt is a new venture from Intercontinental Exchange (ICE) – the company that owns and operates the New York Stock Exchange – and supported by Starbucks. Because of that pedigree – and because of Bakkt’s plans to offer bitcoin-settled futures – many analysts point to the upcoming launch of Bakkt as a key moment in Bitcoin adoption. Bakkt had planned to launch in January 2019, but the US government shutdown caused a delay.

UK-based

• Kraken Futures

Kraken announced its acquisition of UK-based Crypto Facilities on February 04, 2019, rebranding as Kraken Futures. Crypto Facilities initially launched in September 2018 with futures contracts on Bitcoin and four other cryptoassets, including Ethereum. The exchange settles its crypto futures in cash. Unlike CME and Cboe, Kraken Futures offers perpetual contracts, which never expire. Kraken’s entrée into the futures market marks a big step forward, but as of now, trading is off-limits to US residents (but US residents may trade BTC, ETH, and various tokens without leverage on Kraken).

Jurisdictionless

• BitMEX

BitMEX often dominates global Bitcoin trading volume. The popular exchange offers Bitcoin futures, but trading on BitMEX is prohibited in some jurisdictions, including the US. BitMEX’s futures contracts – also available for some cryptoassets other than Bitcoin – are perpetual, like those of Kraken Futures. BitMEX settles all futures contracts – including those based on ETH – in bitcoin.

• Deribit

Deribit offers lower fees than BitMEX and is said to have a faster API. But traders have noted that Deribit has much lower trading volume than BitMEX. The exchange only offers Bitcoin trading, but it is available worldwide. Each Deribit contract is worth 10 USD, and Deribit settles in bitcoin.

Whats the best option for Bitcoin futures?

Everybody has different preferences, but based on its massive volume and settlement in bitcoin, you’ll find it hard to beat BitMEX for trading Bitcoin futures (as long as you live in a permitted jurisdiction – sorry US traders!).

And if you’re more interested in decentralized finance than Bitcoin futures, learn about all things DeFi at DeFi Pulse, and get the best prices across decentralized exchanges at DEX.AG!