Competition Gets Fierce in the Crypto Derivatives Market as Huobi Makes Its Debut
HK-based crypto exchange OKEx launched its brand-new derivative product—Perpetual Swap—on December 11. Perpetual Swap in a peer-to-peer virtual derivative enabling users to speculate the direction of digital asset prices. It allows users to perform perpetual swaps, futures contracts and spot trade with margin and leverage simultaneously. The underlying asset is Bitcoin (BTC), with a leverage up to 100x.
OKEx’s major rival Huobi debuted its crypto derivatives platform, Huobi Derivative Market (Huobi DM), on November 28. The platform offers flexible leverage options of 1x, 5x, 10x and 20x. The underlying asset is also Bitcoin (BTC).
Race Now Features Three Contenders
OKEx and BitMEX were off to a flying start, taking the lead in offering crypto derivatives.
OKEx was the first crypto exchange to facilitate trading for crypto futures contracts, showcasing its large user base and massive trading volume. Yet BitMEX is also a big shot in the market by virtue of its highly leveraged products.
Now with the arrival of Huobi, there are three contenders vying for positions in the market.
Unlike Huobi, both OKEx and BitMEX have launched crypto-focused Perpetual Swap products with a leverage of up to 100x. Yet the industry leader BitMEX has the edge over the other two, by offering contracts that can be settled in both Bitcoin (BTC) and ETH.
Derivatives May Not Be the Way Out in Rolling Bear Market
As Cryptonews Hub previously reported, according to a report issued by digital currency analysis company Diar, the prices of cryptocurrencies have plunged 80–95% from the beginning of the year. Token volumes have also taken a dive across major exchanges, with 60% of cryptocurrencies trading at lower volumes than January. A startling 41% of cryptocurrencies are seeing less than 75% of the trading volumes they saw in January.
According to Google Trends, search interest in “Bitcoin” fell to a one-year low in November, toppling more than 90% from its peak last December.
There’s been a lot of doom and gloom over crypto spot markets. A number of speculators are piling into the crypto futures market in hope of getting rich quick. Yet the crypto derivatives market is no easy place to make a buck.
According to Chinese blockchain media company Acoin, latecomers like Huobi may not be able to branch out so easily. For one thing, exchanges like OKEx and BitMEX have already been active in the crypto derivatives market for some time. They have the upper hand in terms of their strong market position and large investor base. For another, the crypto derivatives market is very different from spot market, entailing high barriers to entry for newcomers both technically and operationally.
As another blockchain media company Shiliu Finance put it, the global crypto derivatives market currently exhibits three features:
- Highly sophisticated system design
- Requires market depth and liquidity
- Requires risk control capability
Though Huobi has gingerly launched an offering with a relatively low leverage, it may fail to attract more users, as many speculative investors are thrill-seeking adventurers.
More and more investors trapped in the enduring crypto bear market are now targeting the alluring crypto derivatives market as they look for a way out.