Over the past two years, futures contracts have become widespread among cryptocurrency traders, and this has become even more evident as the total open interest in derivatives has more than doubled in three months.
Another evidence of its popularity is the fact that the futures turnover has exceeded that of gold, which is a developing market with a daily volume of $ 107 billion.
However, each exchange has its own order book, index account, leverage limits, and cross and isolation margin rules. These differences may seem superficial at first, but they can make a big difference depending on the needs of the trader.
Open public interest in futures (blue) and daily volume (black). Source: Bybt
As explained above, the cumulative total open interest in futures has grown from $ 19 billion to $ 41 billion currently in three months. Meanwhile, daily trading volume exceeded $ 120 billion, which is more than $ 107 billion in gold.
While Binance Futures holds a large share of this market, a number of competitors have similar volumes and open interests, including FTX, Bybit, and OKEx. Some of the differences between exchanges are evident, for example the FTX fee on perpetual contracts (reverse swaps) hourly instead of the usual 8 hour window.
Open interest rate on futures contracts for BTC and ETH, in US dollars. Source: Bybt
Note that CME ranks third in Bitcoin (BTC) futures contracts despite the fact that it only offers monthly contracts. The traditional derivative markets on the CME also stand out in that they require a deposit of 60% of margin, although brokers can provide leverage for some clients.
Stable Currencies versus Token Margin Contracts
When it comes to cryptocurrency exchanges, most of them allow up to 100 times of exploitation. USDT orders are usually denominated in Bitcoin. Meanwhile, perpetual (margin) flipped order books appear in contracts that can cost $ 1 or $ 100, depending on the exchange.
Entering into a permanent BTC future order on USDT. Source: Bybit
The image above shows that a quantity of BTC is required to place a forward Bybit USDT order, and the same procedure is followed on Binance. On the other hand, OKEx and FTX offer users a simpler option that allows the customer to enter the USDT amount while it is automatically converted to BTC terms.
Entering into a permanent BTC future order on USDT. Source: OKEx
In addition to USDT based contracts, OKEx offers the USDK pair. Likewise, Binance Perpetual Futures also offers the Binance USD (BUSD) book. Therefore, there are other options available for those who do not want to use Tether as safe.
Variable financing rates
Some exchanges allow clients to use very high leverage, and although this may not pose a complete risk due to liquidation mechanisms and insurance funds in place in such cases, this will put pressure on the level of financing. Hence, long positions are usually penalized in these exchanges.
ETH futures financing rate for 8 hours. Source: Bybt
The chart above shows that Bybit and Binance generally show higher funding rates, while OKEx consistently shows the lowest rates. Traders should understand that there are no rules for enforcing this, and the price may vary depending on the assets or the current demand for leverage.
Even a difference of 0.05% corresponds to 1% of additional costs per week, which means that it is important to compare funding levels from time to time, especially in beef markets when taxes tend to rise rapidly.