The Bitcoin Mercantile Exchange, or BitMEX, is arguably the world’s largest Bitcoin trading platform. Launched in 2014 and registered in the Seychelles, it is an unregulated exchange that claims tens of billions of dollars in Bitcoin backed cryptocurrency trades in the five years since its inception. BitMEX is considered a pioneer in the business of leveraged Bitcoin trading, and for some time was the only house on the block for that high-risk, high-reward enterprise. Lately, however, other large exchanges have begun wading into the leveraged pool. Will they eventually knock BitMEX from its highly leveraged throne? That remains to be seen. What is beyond doubt is that BitMEX has profited mightily from recent surges in Bitcoin valuation. And although they’ve been buffeted by some regulatory headwinds in the past year or so, they don’t seem to be going anywhere.
Best Leveraged Trading Exchanges
What They Offer
BitMEX is unlike most crypto exchanges in that they only accept Bitcoin deposits. No dollars. No yen. No euros. They also don’t provide an exchange mechanism at the door. That is, you can’t buy Bitcoin when you’re setting up your account and then deposit that. You’ll need to come to them with Bitcoin in hand or no deal. Once you deposit your Bitcoin, it can then be used to purchase other cryptocurrencies with which to trade.
BitMEX offers a range of sophisticated financial products, including margin trading in all supported cryptocurrencies. Certain contracts can be leveraged up to 100x. Although trades of that magnitude are discouraged for novices. That said, they also offer:
- Binary contracts – A binary contract is a simple yes/no contract. In the simplest terms if the trader believes a certain condition will exist at the time of the contract settlement they buy. If they believe that condition will not exist, they sell.
- Futures – With futures, you agree to buy or sell a particular asset at some point in the future for a predetermined price. Certain futures contracts on BitMEX can be leveraged up to 100x. One needs to have their ear firmly affixed to the track and be able to predict exactly what is coming in order to be a successful futures trader.
- Isolated and cross-margin trades – Essentially, these are the two kinds of margin trading allowed on BitMEX. With isolated trading, you choose how much of your wallet value should be used to protect a position after placing an order. And with cross-margin, you allow all of your assets to be used to hold a position if necessary.
As we mentioned earlier, BitMEX only allows deposits in Bitcoin. Same with withdrawals. Once you have deposited your Bitcoin, however, you are able to trade in any one of the following cryptocurrencies:
- Bitcoin (XBT)
- Litecoin (LTC)
- Ethereum (ETH)
- Ethereum Classic (ETC)
- Zcash (Zec)
- Monero (XMR)
- Ripple (XRP)
- Factom (FCT)
- Tezos (XTZ)
- Augur (REP)
- Qtum (QTUM)
- Status Token (SNT)
- EOS Token (EOS)
BitMEX offers its customers a wide variety of order types including but not necessarily limited to:
- Market orders – A market order is one executed at the current market value of the asset.
- Limit orders – This type of order is only fulfilled if the desired priced is realized.
- Stop orders – Stop orders are orders to buy or sell a cryptocurrency when its value hits a certain mark.
- Stop limit orders – These are similar to a standard stop order although they allow for more wiggle room in order valuation once the stop price is realized.
- Stop market orders – These are another variant on the stop order. With the stop market order, the order is not entered into the order book unless and until the trigger point is achieved.
- Take profit limit orders – These orders are more sharply focused on gains as opposed to protecting one’s position against losses.
In a curious move, those in control of the BitMEX trading platform have not gone to any particular lengths to optimize their site for mobile. Considering more than half of all web traffic now originates from mobile platforms, you have to wonder what is driving their thinking on this matter. For now, however, it is what it is. There is no iOS app available as of this writing, and the lone Android app was developed by a third party and is not considered “official.”
The nature of leveraged trading exposes not only the trader but the exchange itself to substantial risk. In order to protect the integrity of the platform and ensure liquidity going forward, BitMEX developed an insurance system. In the simplest terms, should a trader have an open leveraged position that is deemed too close to the maintenance margin that position is either closed or liquidated by the exchange. When a trade is liquidated, the trader’s equity in the position is reduced to zero.
BitMEX is one of the few major cryptocurrency exchanges that has yet to suffer a major hack. But that doesn’t mean hackers haven’t tried. The company circulated a memorandum in early 2019 in which they warned customers about increasing numbers of “unauthorized attempts to access customer accounts.” So far, however, nothing has come of these attempted intrusions.
By and large, BitMEX is considered safe. It utilizes a number of renowned security protocols including Amazon Web Services cloud security. All email communications are secured using PGP encryption. The platform also offers secure communication with the support team and any irregularities discovered between public and private keys cause the platform to automatically shut down, halting trading.
International Partnership with TT
BitMEX recently announced it is forming a partnership with high-performance trading software giant Trading Technologies International (TT). It is hoped the newly integrated TT software will allow BitMEX to address some of the perceived weaknesses of the exchange. It is also hoped the new interface provides a more agreeable platform for professional traders, providing them an enhanced user experience and allowing them to customize the interface to suit their particular needs and preferences. At the same time, the foundational platform should remain readily accessible to the less seasoned traders who constitute a significant portion of the BitMEX user base.