Cryptocurrency analyst. Founder and editor at btcpeers.com
Trading Bitcoin futures is a great way to gain exposure to cryptocurrency. Over a dozen different platforms offer such services, each with their individual fees. Finding the lowest fees on the market will directly influence one's potential profits.
The top platforms in the world of Bitcoin futures tend to generate at least $100 million in daily trading volume. Huobi Futures is the clear market leader, at least where volume is concerned. With over $1.1 billion in 24-hour volume, its BTC_CQ pair is generating a lot of momentum.
Huobi also has a lot of other futures, including BTC-CW, BTC_NW, and BTC_NQ. All of these offerings are relatively popular, confirming Huobi's dominant position on the market. Sustaining this lead over other service providers will not be easy, as competition is heating up further every single day.
OKEx, for example, has noted significant growth for its Bitcoin futures market. This company has several markets, all of which are tied to different expiry dates for BTC-USD. Given the current Bitcoin price momentum, the expiry date of these contracts may indicate where the Bitcoin price is headed over the months to come.
Other noteworthy companies to keep tabs on include: Binance Futures, BitMEX, Deribit, and FTX. All of these companies are known for their futures contracts, although their market dominance rankings tend to shift around quite a bit. External providers, such as CME and CBOE, are also worth exploring, even though they come with a very unique and more institutional-focused fee structure.
That being said, all of the aforementioned platforms have one thing in common: they are not the cheapest in terms of trading fees. It is normal for individual platforms to maintain their own trading fee structure. Competing on these fees, however, is what can help set specific providers apart from the rest of the pack.
Picking the right Bitcoin futures trading platform depends on many different factors. Different types of contracts offered, support for fiat currencies, and overall trading volume all play a crucial role. The trading fees matter quite a bit too, as they will directly determine how much effort it takes to make a profit by trading.
It is not uncommon for futures platforms to charge relatively high maker and taker fees. A taker fee of 0.07% or close to it has become somewhat of the norm. Platforms like BitMEX, Bybit, BTSE, Kraken Futures, and Bitfienx all go above this ratio. That makes them a bit less appealing to traders, for obvious reasons.
At the same time, all of these companies need to make money. For most, the only way to do so is by charging fees, for makers, takers, and settlement. That being said, users are often hesitant to approach platforms charging high fees.
The platforms going below this average fee all tend to note more success. OKEx, Huobi, and Binance all go well below the 0.07% taker fee. More importantly, these platforms are all relatively competitive on maker fees, especially where the lowest fees attainable are concerned.
Additionally, the platforms providing a native token to reduce trading fees - and other benefits - are all doing well for themselves. Building a successful futures trading platform requires an accompanying ecosystem with extra advantages.
The Bitcoin futures industry can always benefit from more competing service providers. One of the new entrants is AAX, a centralized crypto exchange. Users can engage in spot trading, futures, trading crypto against fiat over the counter, or they can place their funds in designated savings accounts to accrue interest. Notably, this platform aims to capture a growing market share by providing a very competitive fee structure.
Depending on the trading amount, users can obtain a fee of 0.01% on both the maker and taker side. This can further be reduced by using the native AAB token, which provides an extra 20% fee discount. Compared to all other platforms, these rates are - by far - the lowest on the market today. Considering how more futures contracts will be added, it is likely to assume that overall liquidity will continue to increase over time.
Comparing the trading volume of the new platform to other providers shows that there is a market for low latency low-cost Bitcoin futures trading. AAX's USDT-settled contract has noted a strong influx of liquidity lately, This is reflected in the daily trading volume, which has jumped in recent weeks from $10 million to $45 million and if we look at the market today (21 Aug.) we’re seeing volumes ranging between $200 million to $600 million - and that is just on AAX’s main futures market (BTCUSDT). This puts the new competitor ahead of [some] offerings provided by Deribit, Kraken Futures, and several other platforms already.
This increase in liquidity will also drive more attention to the option to further reduce trading fees. Through the native AAB token, fees can be decreased by 20%. It is evident that competing on trading fees is the right way to go in the Bitcoin futures industry right now. Giving users more options to pocket a higher profit will always attract positive attention.
One interesting aspect of AAB is how the token has other use cases too. Users can, simply by putting their AAB to work through the savings feature, earn more tokens every day. This will ensure they can generate a continual supply of extra tokens - or USDT if they so prefer - to maintain lower Bitcoin futures trading fees.
Numerous exchanges have issued their own token over the years, each of which has its own advantages. The token with the biggest market cap is Binance Coin or BNB. It is supported by the Binance exchange to help reduce trading fees, as well as provide access to Initial Exchange Offerings organized by Binance Launchpad. However, the trading fee reduction of BNB runs out after five years, which gives it somewhat limited functionality.
OKEx is another exchange with its own token, called OKB. It has been around for several years and provides a bridge between the exchange and its users. The OKEx team buys back tokens from the open market and burns them subsequently. The KB token also provides access to trading discounts, but there is no “time limit” during which it provides this benefit.
Huobi, one of the older exchanges on the market, manages the Huobi Token. With a limited supply of 500 million HT, it is used across all applications in the Huobi Group ecosystem. Holders will also provide rewards to holders. Huobi follows OKEx’ lead by buying back tokens on the open market every so often.
Judging by these examples, it quickly becomes apparent that exchange tokens all tend to follow a very similar pattern. More specifically, several exchanges buy back tokens, whereas others offer reduced trading fees. However, none of them provides access to a savings feature, which is something that a lot of investors can benefit from in the long run.
There is always a trade-off between using a token to reduce trading fees, achieving buybacks on the open market, or effectively unlocked brand new use cases. Looking at the overall comparison, it quickly becomes apparent the market is offering something for every type of investor.
Trading Bitcoin futures is certainly gaining a lot more momentum. Regardless of whether Bitcoin is bullish or bearish, it provides a way to make money under any market circumstances. Exploring these opportunities is always worthwhile, especially with more platforms trying to compete on overall trading fees.
The same applies to the more renowned altcoins, such as Ethereum, XRP, Litecoin, and others. All of these assets could prove worthwhile to futures trading, assuming there ever will be [more] contracts for doing so. Whoever comes to market with such contracts first may be able to gain a permanent competitive advantage over other trading providers.