BitMEX is by far the most liquid and widely recognized Bitcoin Futures exchange.
However, it is also plagued by several controversies, like its famed “overload errors”, and the firm’s internal trading desk, which is rumored to trade against clients.
In this BitMEX review, we’ll break down everything you need to know about one of the first platforms to offer bitcoin derivatives and margin trading.
Aside from compare the pros and cons, we also its outline fees, leverage, coins, and more. At the end of the article, you will know exactly if the exchange is a good fit for you, or not.
What is BitMEX?
BitMEX is an old hand in the cryptocurrency derivatives industry and stands out as arguably the most liquid and powerful Bitcoin futures exchange currently available.
- Wide variety of cryptocurrency futures, including perpetual contracts
- One of the oldest and most popular Bitcoin futures markets
- Up to 100x leverage available
- Only supports Bitcoin deposits
- Withdrawals are only processed once per day
- Huge popularity sometimes leads to a platform overload
BitMEX is designed for experienced traders with a good understanding of derivatives products, and Bitcoin futures in particular.
Like many cryptocurrency derivatives trading platforms, BitMEX allows users to trade on leverage. This essentially means traders can open positions much larger than their account balance by temporarily borrowing funds from the platform.
For example, with an account balance of $5,000, it is possible to temporarily open positions worth up to $500,000, allowing cryptocurrency traders to multiply their exposure to price movements. This allows traders to extract incredible gains from even small market movements while ensuring those with limited capital can still turn a fair profit.
Initially launched in 2014, BitMEX became one of the first trading platforms to offer Bitcoin futures and quickly became somewhat of a juggernaut in the industry. The platform now racks up incredible daily trade volume for most of its contracts, meaning liquidity is rarely a concern on the BitMEX exchange.
A large part of this success can be owed to its strong founding team, comprised of CEO Arthur Hayes, CSO Samuel Reed, and Ben Delo—each of whom is experienced with trading platforms, finance and/or web interfaces.
The platform currently has its headquarters in Seychelles, but also has a presence in Hong Kong and Bermuda, as well as several offices in the United States. The exchange platform is owned and operated by HDR Global Trading Limited, a business entity registered in the Republic of Seychelles under company number 148707.
On BitMEX, all contracts are quoted in USD, but are settled in BTC—regardless of which underlying cryptocurrency a contract tracks.
Despite earlier criticism surrounding its tendency to overload during times of peak activity, a variety of recent tweaks to its load shedding protocols has massively improved the uptime of the platform, but it can still suffer from overloads during times of exceptional market activity.
Next in this BitMEX review, we’ll proceed with analyzing the exchange’s coins and leverage
BitMEX Coins and Leverage
Unlike many cryptocurrency derivatives exchanges, BitMEX offers a wide variety of different contract types. All contracts enable traders to go long and also to go short.
Most of these products are traditional futures, though the platform also offers a handful of perpetual contracts.
Previously, the platform also offered both upside and downside profit contracts, but these were removed in January 2020 due to poor uptake.
Contracts are offered for a wide variety of different cryptocurrencies, including Bitcoin (XBT), Cardano (ADA), Bitcoin Cash (BCH), EOS, Ethereum (ETH), Litecoin (LTC), Tron (TRX) and XRP.
Out of these, XBT has the most contract varieties available, with both a perpetual swap and traditional futures with three expiries on offer. The full range of derivatives available is outlined below:
All contracts available on BitMEX can be traded on leverage.
The maximum leverage available differs by product, but currently maxes out at 100x for the Bitcoin perpetual contract.
Besides this, all other futures products can be traded with between 20-50x leverage—a full breakdown is provided below:
- ETH: up to 50x leverage
- LTC: up to 33.33x leverage
- XRP, BCH, ADA, EOS and TRX: up to 20x leverage
With that said, all contracts have a maintenance margin of just half that of the base margin, which means positions can end up with effective leverage of double that allowed when first opening a position. As such, it is possible to achieve up to 200x leverage with Bitcoin futures on the platform before automatic liquidation occurs.
BitMEX has two different margin modes: isolated margin and cross margin. Cross margin is enabled by default, and uses the total account balance as margin, whereas isolated margin can be used to restrict the margin on a position to a fixed amount.
Besides its impressive array of futures contracts, BitMEX also stands out as arguably the most liquid Bitcoin futures trading platform currently in operation.
As of writing, the BitMEX XBT/USD perpetual contract typically achieves between $3 to $5 billion in 24-hour trade volume, whereas its next most liquid contract is the ETH/USD perpetual, which typically achieves more than $500 million in 24-hour volume.
Comparatively, BitMEX’s other futures contracts have considerably less trade volume but are by no means illiquid. Most other futures tend to see around $10 to $20 million in daily trade volume, with the ADAH20 contract having the lowest liquidity out of these.
When it comes to trading fees, BitMEX keeps things relatively simple, ensuring traders always know exactly how much they are going to be charged as commission for each trade.
For Bitcoin, XRP and Ethereum perpetual contracts, BitMEX charges a flat 0.075% taker fee and provides a 0.025% maker rebate. Fees are typically higher for its traditional futures but vary depending on the coin.
Those trading Bitcoin futures will be subject to a 0.075% taker fee, with a 0.025% maker rebate, whereas traditional futures for all other cryptocurrencies have a flat 0.25% taker fee and a 0.05% maker rebate. Beyond this, all Bitcoin futures held until expiry will also be subject to a 0.05% settlement fee; settlement of altcoins futures does not attract a settlement fee.
Besides the maker and taker fees, traders of perpetual contracts will also need to consider the funding rate. Although not a fee as such, since BitMEX doesn’t take a cut, the funding rate is a value that is transferred between the longs and the shorts on a contract.
The funding rate varies depending on a variety of conditions and can either be negative or positive. If the funding rate is positive, then the longs pay the shorts, whereas a negative fee indicates the shorts pay the longs.
This fee is calculated using the following formula:
Funding Rate (F) = Premium Index (P) + clamp(Interest Rate (I) – Premium Index (P), 0.05%, -0.05%)
Funding fees are paid in 8 hour intervals.
Beyond this, there are no specific BitMEX fees for deposits and withdrawals, but users will be charged a dynamic network fee depending on the Bitcoin blockchain load. This fee can be manually adjusted by users.
Lastly, unlike many other trading platforms, the BitMEX exchange does not offer volume-based fee discounts, nor does it have its own platform token which can be used to reduce fees.
How to get started on BitMEX
Since BitMEX doesn’t require KYC to begin trading, getting started on the platform is a pretty straightforward process.
1) Create a BitMEX account
To begin using BitMEX, you will first need to create an account on the platform. To do this, simply head over to the BitMEX registration page, and complete the required fields by entering your email address and selecting a secure password.
You will also need to provide your full name and select your country of residence. Once completed, you will be sent a verification email containing a link you will need to open to activate your account.
2) Deposit Bitcoin
Once your account is confirmed, you will then be free to log in and fund your account. To obtain your deposit address, navigate to the ‘Account’ part of the site and select the ‘Deposit’ button.
Your unique Bitcoin deposit address along with its corresponding QR code will be displayed on the next page.
Simply deposit any BTC you intend to trade with to this address and it will be displayed in your account balance after 1 network confirmation—usually around ten minutes, depending on the fee you used.
Note that BitMEX only accepts Bitcoin deposits and withdrawals, despite offering contracts that track other cryptocurrencies.
3) Select a contract and create your first order
Once your deposit is confirmed and made available in your account balance, you will then be free to buy or sell contracts in any market you choose through the BitMEX trading interface.
To do this, click the ‘Trade’ button in the website header to open the trading dashboard. Just beneath the header, you will find a list of all the contract options available on the platform.
Select the cryptocurrency you wish to trade contracts for, and then select the desired contract in the bar beneath.
After selecting the market you wish to trade, you will then be able to use the trading panel on the left of the trading interface to set your trade parameters.
Here, select an order type at the top of the trading panel (e.g. Limit, Market, Stop Market), enter the number of contracts you wish to trade, and set your leverage and other specifics.
Lastly, double-check your order details, before clicking the buy or sell button to execute the order. Market orders should be filled instantly, whereas limit orders will enter the order book to be filled when the chosen market conditions are met.
User experience: Supported Countries, KYC, and usability
To properly review BitMEX, it’s also crucial to analyze the user experience.
When it comes to using the futures exchange, the platform can be relatively daunting to newer traders—largely due to the less than intuitive user interface and dated design of the platform. Because of this, BitMEX is best suited to traders that already familiar with margin trading and cryptocurrency derivatives.
As far as charting features go, BitMEX has arguably one of the most comprehensive charting tool-sets available on the market and includes a wide variety of chart and candle types, numerous built-in indicators and technical analysis tools that can be used for identifying trading opportunities.
Beyond this, most contracts also have a good range of order options, including manually adjustable leverage, multiple take profit, and stop-loss options, while BitMEX stands out as one of the few margin trading platforms to offers a trailing stop loss feature. Moreover, BitMEX gives users the option to use either isolated margin or cross margin—a useful feature for anybody looking to keep their overall risk in check.
With that said, those looking to get to grips with the platform without risking any money can do so using the BitMEX testnet—a fully functional exchange platform where users can test strategies and familiarize themselves with the BitMEX interface by using testnet bitcoin funds.
As an intermediate to advanced level trading platform, BitMEX also features a robust API that can be used for automatic and high-frequency traders. Thanks to the prominence of the exchange, the BitMEX API is also supported by many popular automated trading bots.
This is also supplemented by integrations for Sierra Chart and NinjaTrader, for those that prefer these advanced trading interfaces.
With that in mind, BitMEX’s powerful trading options in addition to its robust charting interface gives traders a great deal of control over their positions, but do increase the complexity of using the platform. As such, anybody looking for a simpler—albeit less powerful trading platform might want to take a look at Coinbase and eToro, since these are designed to be as accessible as possible.
In terms of regional availability, BitMEX is available for users in the vast majority of countries, barring a few notable exceptions, including the United States of America, the province of Québec in Canada, and the Hong Kong Special Administrative Region of the People’s Republic of China. Beyond this, the residents in the Republic of Seychelles, Cuba, Iran, Syria, North Korea, and Sudan, as well as a handful of other smaller countries are not allowed to use the platform.
Lastly, BitMEX is one of the vanishing minority of cryptocurrency trading platforms to completely lack know-your-customer (KYC) requirements. This means users can access and use the platform without needing to fork over their identity information before being able to trade.
Customer Support at BitMEX
As a platform that deals with more advanced trading instruments like perpetual contracts and traditional futures, it is important that BitMEX provides its users with prompt customer support, as well as ample educational and informative content to help make better trade decisions.
Fortunately, customer support is one area where BitMEX performs relatively well.
Unlike some platforms, BitMEX doesn’t offer either live chat or telephone support, which means support often isn’t instantly accessible. However, the platform does a good job of attending email and internal ticket support requests promptly and most concerns are dealt with within 24 hours. Beyond this, BitMEX is possibly the only margin trading platform to operate an IRC channel, allowing users to quickly get assistance both from other members and BitMEX support staff.
For those with more generic concerns, BitMEX provides a comprehensive knowledge base that contains answers to the most common questions and issues faced by users. The knowledge base is also an excellent resource for those less familiar with margin trading or cryptocurrency derivatives since it contains a variety of beginner’s guides.
Unlikely most other margin trading platforms, BitMEX also has its own research blog, where users can find weekly articles discussing the current state of the blockchain industry and major events, in addition to in-depth market review pieces. Most of these pieces are rather technical, and so are more geared towards those well-versed in the blockchain and cryptocurrency industries.
BitMEX also maintains a strong social media presence on a variety of platforms, including Twitter and its own subreddit /r/BitMEX, where customers can request support or discuss the exchange. Likewise, BitMEX CEO Arthur Hayes can also be directly reached on Twitter.
In review, BitMEX has a wide variety of support options on offer, while its knowledge base and research blog are among the best we have seen.
BitMEX Security: Is BitMEX Safe?
One of the most important considerations when choosing a trading platform is security. After all, cryptocurrency trading platforms are often used for storing a significant amount of funds and as such, are one of the most common targets for hackers and scammers.
Fortunately, BitMEX considers security an utmost priority and has clearly put a lot of work into ensuring both the platform, and user funds remain secure at all times. At the crux of this security is the exchange’s cold storage solution, which sees the bulk of user funds kept in a secure offline environment.
These cold storage wallets are protected by a multi-signature protocol, which means two of three key holders are needed to authorize the release of funds.
Moreover, the platform leverages the world-class security of Amazon Web Services (AWS) and operates a custom-designed trading engine that was written in kdb+, a database and toolset commonly used by banks for high-speed trading applications.
According to BitMEX, even if the entire system is compromised, including its web servers, trading engine, and database, an attacker would still be unable to steal user funds. Lastly, withdrawals are only processed once per day at 13:00 UTC, giving the team ample time to spot any anomalies before funds are released.
Beyond these backend side security considerations, BitMEX also offers a variety of customer-side options to ensure its users can properly secure their accounts. These include IP-based access restriction, which automatically logs you out if a new IP address is detected mid-session (not recommended for mobile users), as well as PGP email encryption, which you can use to encrypt any emails BitMEX sends you.
In addition to authenticator-based two-factor authentication, BitMEX is also one of just a handful of exchange platforms to support two-factor authentication keys, including the Yubikey.
BitMEX also has by far the largest insurance fund of any cryptocurrency margin trading platform around—which currently has a balance just north of 34,000 BTC, ore more than $300 million.
This fund is used to protect trade winners from bankrupt counterparties and ensures that positions can be liquidated at the expected prices even during times of extreme volatility.
With that said, a recent blunder did see the email addresses of thousands of BitMEX users leaked. Shortly after the blunder, BitMEX owned up to the issue and issued an apology to its users. No financial information was revealed and it appears nobody lost any funds as a result of the leak.
Nonetheless, two of BitMEX’s major competitors, Bybit and Deribit have not faced a similar issue, and also remain unhacked to this day.
The platform is operated by HDR Global Trading Limited, a Seychelles-based company that can be held responsible should BitMEX ever suffer a serious breach or hack.
Overall, it is clear that BitMEX has performed an extensive review of customer security concerns, as well as a review of the shortcomings of its competitors. Because of this, the platform can be considered one of the safest places for derivatives traders.
Pascal Thellmann is an investor and marketer focused on the intersection of cryptocurrency and the legacy financial system. He co-founded Bounty0x, which at the time was the largest crypto freelance platform. Now Pascal dedicates his time to CoinDiligent and trading. You can get in touch with Pascal Thellmann on LinkedIn.