Boxmining v2

Category: Cryptocurrency Trading

Trading is a fundamental aspect of the cryptocurrency space. As exciting as crypto trading is, it is also highly risky and complex. This section gives an introductory guide to the various aspects of cryptocurrency trading.

  • Active Crypto VCs To Watch: Secrets to Success?

    Active Crypto VCs To Watch: Secrets to Success?

    Crypto venture capitalists (VC) aim to invest in blockchain projects and companies with high potential. These firms usually provide early-stage startups with capital, guidance, and resources to help them expand. Venture capital firms are crucial to the blockchain ecosystem, as they offer valuable resources that enable projects to grow and scale rapidly. Here’s our picks for the top active crypto VCs you should follow and look out for.

    What is a crypto VC?

    A crypto VC, or crypto venture capitalist, is a type of venture capital firm that specializes in investing in early-stage startups that offer products or services related to cryptocurrency, blockchain technology, and digital assets. They typically fund projects through equity investments, token sales, or other financial instruments. In addition to providing capital, crypto VCs also offer guidance and advice to the startups in which they invest.

    What does a crypto VC do?

    Crypto VCs fund projects through equity investments, token sales or other financial instruments. In addition, they also provide guidance and advice to the startups in which they invest. Hence, they play a vital role in the blockchain ecosystem by providing valuable resources to support projects’ growth and scaling quickly.

    What makes a good crypto VC?

    There are several factors that contribute to a good crypto venture capital (VC) firm. These include:

    Total assets under management (TUM)

    This measures the total value of all the investments managed by a venture capital firm. It is used to measure the size and performance of a firm and can indicate its success in attracting investors and making successful investments.

    Number of successful investments (track record)

    This serves as an indicator of a firm’s ability to identify, invest in, and help grow promising businesses. It provides a measure of the firm’s performance over time and allows potential investors to gauge the quality and success of the investments made.

    Reputation in the industry

    A good reputation helps build trust, which is essential for successful fundraising and investment. Additionally, a solid reputation can help to create relationships with the most promising entrepreneurs and startups, leading to more successful investments and higher returns for the firm.

    Network and resources

    Having access to resources such as industry contacts, financial advisors, legal counsel, and other specialized professionals can help a venture capital firm make informed decisions, maximize investment returns and protect its interests. Additionally, having an extensive network of investors can provide a venture capital firm with additional funding sources for new investments and support existing portfolio companies.

    The team

    The quality of a venture capital firm’s team and staff plays a significant role in the decision-making process. They must be knowledgeable about the industry, have a good understanding of the market, and be able to identify and assess potential investments accurately.

    Portfolio projects/companies

    The quality of portfolio clients directly affects a crypto VC’s return on investment. Venture capital firms invest in companies expecting to generate a significant return. If the portfolio companies are unsuccessful, the venture capital firm won’t be able to generate a profit.

    As a cryptocurrency trader, it can be helpful to follow these good crypto VC firms. This is because a crypto VC firms offer capital and operational assistance to blockchain startups that are behind innovative, disruptive ideas. The firms spend countless hours of research into finding viable crypto projects with the most potential. Also, the portfolios of crypto VC firms is publicly available, which offer a great opportunity for retail investors to spot the best upcoming crypto projects in the market. Therefore, by following a good crypto VC firm, crypto traders can gain enhanced market insights and stay informed about new opportunities and trends.

    Active Crypto VCs to look out for

    Based on the factors mentioned above, here are some active crypto VC firms to look out for in 2023.

    Sequoia Capital

    Number of investments: 1,805

    Total assets under management: $85 billion

    Sequoia Capital is a highly regarded venture capital firm with a reputation for investing in some of the world’s most successful technology companies, such as OpenAI, Apple, Google, and LinkedIn. Its ability to identify and support early-stage startups has earned it widespread admiration from entrepreneurs, investors, and the broader tech community. Notably, Sequoia Capital recently invested US$120 million in LayerZero Labs, a company developing a trustless omnichain interoperability protocol to connect multiple chains.

    LayerZero may do an airdrop in the future! Learn more with our LayerZero ($ZRO) Token Airdrop Guide

    Coinbase Ventures

    Number of investments: 328

    Total assets under management: Over 30 billion

    Coinbase Ventures was founded in 2018 by the Coinbase cryptocurrency exchange. However, Coinbase Ventures is not directly backed by the exchange and is a separate entity. It specializes in early-stage VC deals and operates almost exclusively in the blockchain and cryptocurrency space. Some of the firm’s recent investments include Dolomite.io, Cloudburst Technologies, and zkLink, where it raised US$10 million.

    The firm mostly focuses on investing in Decentralized and Centralized finance (DeFi, CeFi), followed by crypto protocols and Web3 infrastructure.

    Pantera Capital

    Number of investments: 220

    Total assets under management: $4.1 billion in blockchain or blockchain-related assets

    Pantera Capital was founded on 12th February 2003 by Dan Morehead, a former CFO and head of Macro Trading at Tiger Management. Before 2014, Pantera’s focus was on global macro hedge fund investments. Since then, the firm has shifted its investment advisory services to concentrate solely on Bitcoin, other digital currencies, and related companies. Recent investments by Pantera Capital include OmniNetwork and Teahouse Finance. In particular, the recent investments into Prisim Labs and M’ZERO Labs were US$26 and US$22.5 million respectively.

    Binance Labs

    Number of investments: 90

    Total assets under management: $7.5 billion

    Binance Labs is a blockchain incubator and venture fund created by Binance, one of the world’s leading cryptocurrency exchanges. It has a major following in the industry for its commitment to helping startups succeed in the crypto and blockchain space. Binance Labs typically provides capital to blockchain startups in exchange for a stake in the new business. In addition to providing capital, Binance Labs offers support and guidance to these startups, assisting with developing their product/service, identifying potential customers and partners, and navigating the legal and regulatory environment. Binance Labs also provides access to their network of industry contacts and resources, which can help the startup succeed. Recent investments include Playbux, GOMBLE, Gameta and Polyhedra Network.

    Polychain Capital

    Number of investments: 198

    Total assets under management: $6 billion

    Polychain Capital was founded in 2016 by Olaf Carlson-Wee, who was previously an employee of Coinbase where he was Head of Risk. Investors of Polychain include Andreessen Horowitz, Sequoia Capital, Union Square Ventures and Founders Fund. Their latest crypto/blockchain investments include Webb Protocol, Thetanuts Finance, Polyhedra Network and Scroll.io.

    Scroll.io plans to release their token around the same time as their mainnet launch in Q2 2023. This could mean a Scroll token airdrop! Learn more with our Scroll token airdrop guide.

    Digital Currency Group

    Number of investments: 301

    Total assets under management: $3.5 billion

    Digital Currency Group (DCG) was founded in 2015 by Barry Silbert. DCG has made over 301 investments and has had 36 exits. Some of its most notable exits include Coinbase, Voyager, and Silvergate Bank. DCG has also made 26 diversity investments. The company has six main subsidiaries: Grayscale Investments, Genesis, Foundry US, CoinDesk, Luno and TradeBlock. Grayscale Investments operates a number of publicly-traded trusts that hold cryptocurrency assets like Bitcoin and Ethereum. Genesis is an over-the-counter cryptocurrency exchange that also offers lending services. DCG is a bit quiet on the investment side in 2023, but have made 2 investments into Axoni and Coinflow Labs.

    Paradigm

    Number of investments: 92

    Total assets under management:  $1.51 billion

    Paradigm was founded in June 2018 and has invested in some of the most successful projects in the space, including Ethereum, MakerDAO, Filecoin, 0x and DFINITY. Paradigm has made 92 investments and has had 5 exits. Some of its most notable exits include Coinbase, Compound, and Tagomi. The Company has only made 2 investments so far in 2023, namely Ulvetanna and Conduit.

    Andreesen Horowitz (a16z)

    Number of investments: 40

    Total assets under management: $4.5 billion

    a16z, also known as Andreessen Horowitz, was founded in 2009 by Marc Andreessen and Ben Horowitz. The Company, headquartered in Menlo Park, California, supports bold entrepreneurs who are building the future through technology. They are stage agnostic and invest in seed to late-stage technology companies across various sectors including bio and healthcare, consumer, crypto, enterprise, fintech, games, and companies building toward American dynamism. a16z are the most active VC firms in our list, having made 9 investments in 2023 alone. Their most recent being a US$120 million investment into LayerZero Labs.

    Ozaru Ventures

    Number of investments: 29

    Ozaru Ventures was founded in 2021 and is currently based in Hong Kong. What sets Ozaru Ventures apart from other traditional VC firms is that it has an in-house creative content and PR marketing firm. This gives the Company a leading advantage in boosting the success of its investments in preparation for and after its public launch. Ozaru Ventures boasts an influencer network of over 1000 members and over 100 million followers across various social media platforms. This has allowed the Company to 5x the engagement and 300x the token launch of its portfolio companies. Notable investments in 2023 include an exclusive partnership with Hacken to tap into and promote its presence across Asia, which accounts for over 43% of global cryptocurrency activity.

    FBG Capital

    Number of investments: 72

    Total assets under management: $312 million

    FBG Capital was founded in 2015 and currently based in Singapore. They are one of the largest and earliest blockchain investment firms and their portfolio companies include Ampleforth, Dapp.com, FTX Exchange, Neutral Dollar, ThunderCore, and Wintermute Trading. FBG Capital have also been quite conservative in 2023, they have only 1 invested project, namely a US$3m investment in FilSwan.

    Union Square Ventures

    Number of investments: 414

    Total assets under management: $1.5 billion

    Union Square Ventures (USV) entered the blockchain and cryptocurrency space in 2011. As of last year, companies in the blockchain/cryptocurrency space made up 15% of its portfolio, and the fund invested in blockchain-related companies for a quarter of its most recent investments. Some of their notable investments in the cryptocurrency space include Coinbase. In 2023, USV made 7 investments, a high number compared to a lot of funds on this list. Of these, notable investments include a $14m and $55m investment into m3ter and Zeitview respectively.

    Draper Associates

    Number of investments: 355

    Total assets under management: $5 billion

    Draper Associates is a seed-stage venture capital firm founded in 1985 by Tim Draper, who also founded the Silicon Valley venture capital firm known as Draper Fisher Jurvetson (DFJ). Draper Associates encourages entrepreneurs to drive their businesses to greatness and transform industries with new technologies. The firm has invested in many successful companies, including Tesla, Skype, Baidu, Twitch, and Robinhood. The Company has so far made 9 investments in 2023 in various industries, only 1 of which relates to cryptocurrency i.e. a $4m investment into Amboss.

    Conclusion

    Crypto venture capitalists are experts in investing in early-stage startups that focus on cryptocurrency, blockchain technology, and digital assets. They provide funding through various means such as equity investments and token sales and offer valuable guidance and advice to the startups they invest in.

    While the VC firms mentioned in this article have established themselves as leaders in their field, there are many others that are still emerging. The cryptocurrency and blockchain space is constantly evolving with new companies entering the market. However, receiving VC funding does not guarantee success for a startup. It is ultimately up to the startup to demonstrate that their product or service is a worthwhile investment for VC firms.

  • Crypto Market Analysis for Beginners: Looking at Macro Data (Inflation, Interest Rate) to Determine Trends

    Crypto Market Analysis for Beginners: Looking at Macro Data (Inflation, Interest Rate) to Determine Trends

    The crypto market is volatile and unpredictable, but there are events outside of the crypto space that heavily influences the performance of the market. If you are unsure of how the market will react, it always helps to take a step back and look at the bigger picture, which in this case is the macroeconomic data.

    Why Technical Analysis and Narratives are Not Enough

    A lot of people use technical analysis and narratives to determine future price movements. For example, traders would use chart patterns, trading ranges, and technical indicators to determine bullish or bearish trends. On the other hand, investors with a more fundamental approach tend to capitalize on rising narratives in the crypto industry, such as the upcoming Ethereum Shanghai Upgrade causing liquid staking derivatives to pump or halving events for Bitcoin.

    These can be effective strategies, but not always reliable because there are larger forces at play. When the Ethereum Merge came in September, everyone expected ETH to surge in price because of the hype. But the crypto market was under pressure from macroeconomic factors causing broader investment market volatility rather than negative reactions from investors. This was when inflation and interest rate was at its highest for the year, affecting not only the crypto market but other financial markets as well.

    How Do Macro Data Influence the Crypto Market?

    As we have seen in 2022, short term speculation has been significantly influenced by macroeconomics. Since crypto is not widely adopted yet, it is still treated as a speculative asset. As such, Bitcoin’s price movement tend to mirror Nasdaq tech stocks, despite its vision of decoupling from the stock market. It is important not to underestimate macro data as they affect all financial markets. These are some of the common macro data to look out for when analyzing the market.

    U.S. Consumer Price Index (CPI)

    Inflation is measured by the Consumer Price Index (CPI). It is a key economic metric based on prices that consumers pay for goods and services throughout the U.S. economy. When CPI is high, it means that prices for goods and services have risen, indicating inflation. Essentially, high inflation erodes the purchasing power of fiat currencies, meaning that individuals have less buying power for goods and services.

    As a result, inflationary pressures can cause market volatility, as people are more likely to save money for daily necessities and reduce their exposure to risky investments such as crypto. But as shown in the image below, the inflation rate and CPI are cooling off in 2023, which means that the worst is already behind us.

    Federal Interest Rate

    The federal interest rate, also known as the federal funds rate, is the benchmark interest rate set by the Federal Reserve (the central bank of the United States) for overnight lending between banks. It is measured in basis points (bps), describing the percentage change in the interest rate. One basis point is equal to 0.01%. It is an important tool used by the Fed to influence the overall level of interest rates in the economy and to affect the supply of credit.

    The fed rate goes hand-in-hand with CPI and inflation rate. If the Federal Reserve raises interest rates, it becomes more expensive to borrow money. This affects businesses in particular, and shifts the investment landscape from risk-on to risk-off, reducing the demand for stocks and crypto alike.

    Although CPI and inflation has been cooling off in 2023, it is not guaranteed that the Fed will scale back to 25 bps. According to Bloomberg, broader analysis of economic and financial conditions would favor the Fed raising rates by 50 bps. This could result in a stock market dip, which also affects the crypto market.

    Supply Chain

    The supply chain refers to the series of industries involved in the production, delivery, and distribution of goods and services worldwide. They are key indicators of global economic activities. Strong economic growth can increase demand for cryptocurrencies, as investors seek alternative investments in a growing market. On the other hand, weak economic growth or disruptions in the supply chain can reduce demand for cryptocurrencies and impact their price.

    As of 2023, the supply chain is slowly recovering as the COVID pandemic is dying down. With the rise of artificial intelligence (AI) tools such as ChatGPT, supply chain leaders are focusing on automation, robotics and sustainability to improve manufacturing and solve labor cost problems. As such, shipping costs and gas prices have gone down. But there are still some areas struggling with shortages and bottlenecks, leading to bankruptcies and unemployment. For more information, Forbes has published an article sharing their insight on supply chain trends in 2023.

    US Gross Domestic Product (GDP)

    Out of all countries, the US seems to have been the dominating narrative in what has affected the price action of the crypto market. This could be related to the US CPI and Fed interest rates. While the US GDP does not have a direct affect on crypto prices, it can indirectly impact crypto prices by affecting the overall economy, consumer confidence, and market sentiment.

    A strong US economy may increase consumer confidence and investment, potentially leading to an increase in crypto prices. Conversely, a weak economy may lead to a decrease in consumer confidence and investment, potentially leading to a decrease in crypto prices.

    Housing Market

    The housing market can affect crypto prices indirectly, as changes in the housing market can impact the overall economy and consumer confidence. A strong housing market can boost consumer confidence and lead to an increase in investment, potentially resulting in an increase in crypto prices.

    On the other hand, a weak housing market can dampen consumer confidence and lead to a decrease in investment, potentially leading to a decrease in crypto prices. However, it is important to note that the relationship between the housing market and crypto prices is not direct and can vary depending on various other factors such as interest rates, economic policy, and global events.

    As of 2023, the supply chain recovery has helped bring back inventory of single family homes on the market, and has increased the supply side as well. But with mortgage rates increasing, it is unlikely there will be an increase in demand for housing any time soon. Therefore, it is highly likely there will be a housing market correction, but we do not know if it is going to small or big.

    Source: Altos Research

    Oil Prices

    Energy has been a critical factor in the economic turmoil and increased inflation in the past year, and it has mainly come from oil prices. With the ongoing war in Ukraine, many people were fearful of a major worldwide energy crisis this winter. Although there was an energy crisis in Europe, it was not as bad as predicted. Meanwhile, oil prices dropped from $120 to $80 as a result of CPI and inflation rate cooling off.

    Key Takeaway

    Macroeconomic data is important for crypto prices because it can provide insight into the health and stability of the overall economy, which can impact investor confidence and market sentiment. This, in turn, can affect demand for cryptocurrencies and ultimately their prices. Macroeconomic data such as GDP, inflation, interest rates, employment figures, and trade balances can all provide a broader understanding of the economic environment, helping traders and investors make informed decisions about the crypto market. Additionally, changes in macroeconomic conditions can also impact the supply and demand of cryptocurrencies, affecting their prices.

  • SwissBorg ($CHSB): What is it?

    SwissBorg ($CHSB): What is it?

    SwissBorg provides users with tools (Wealth App, Smart Yield, $CHSB token, etc.) and the infrastructure (wider support from community, regulatory clarity etc.) to manage their cryptocurrency investments with negligible effort. Swissborg’s aim for doing this is to help users navigate the relatively new field of cryptocurrency which at times can have complex concepts and rather scattered infrastructure with little standardisation. In this article, we will take a deep look at SwissBorg: its merits, the problems it attempts to solve, and everything in between.

    Sign up for SwissBorg with our exclusive link to get free CHSB!

    Table of Contents

    Background

    Launched in December 2017 after having raised over USD $52 million, SwissBorg was founded by Anthony Lesoismer and Cyrus Fazel. Based in Switzerland and fully compliant with Swiss Law, the project has a multicultural team that comprises members from 200 countries consisting of highly experienced professionals having experience in major banks and investment management firms.

    What Is SwissBorg?

    SwissBorg is the first blockchain-based secure wealth management platform, aimed at simplifying the process of crypto investments, integrating with major digital asset exchanges and featuring community-based ownership. They also have a mobile version called “Wealth App” which is available for both iOS and Android platforms (see below).

    The top achievements of the project, so far, have included its successful fund-raising of USD $53 million, large community, blockchain referendums, gamified Bitcoin prediction app, and a high-performing native token.

    Supported countries

    SwissBorg is available in over 100 countries (however it is currently not supported in the US) with many more to come. Although for some countries, the full range of features offered by SwissBorg may not be available. See here for a full list of supported countries.

    Supported assets

    SwissBorg supports over 30 cryptocurrencies including BTC, ETH, CHSB, USDC, PAXG, ENJ, BNB, LTC, XRP and BCH. They also have ongoing votes on which other cryptocurrencies should also be listed.

    SwissBorg also supports 16 fiat currencies including EUR, USD, GBP, CAD, HKD, and SGD. Check here for a full list of SwissBorg’s supported assets.

    Swissborg supported fiat currenciesSwissBorg Network Token ($CHSB)

    The platform’s multi-utility token is SwissBorg ($CHSB), which is an Ethereum-based and ERC-20 compliant token. It has a circulating supply of 715 million out of a total of 1 billion.

    The rest of the held supply is reserved for the development and promotion of the project. The CHSB token is traded on major exchanges like KuCoin, Uniswap (v2), Yobit, HitBTC, IDEX etc. and has multiple use cases.

    Use Cases

    CHSB token powers the entire SwissBorg ecosystem. It is used for staking for platform’s fee discount and grants voting rights on the platform.

    Furthermore, it is also used for reward distribution through the “Proof of Meritocracy” concept as well as the team’s “Protect and Burn” policy. The purpose of the policy is to increase scarcity and enhance the value of existing tokens through burning the supply from generated revenue.

    Proof of Meritocracy

    SwissBorg token holders can participate in choosing the progress and development of the network through the Proof of Meritocracy policy. The CHSB token generates an RSB token, which is a referendum token for users to vote on referendum proposals. Users holding more CHSB will have more voting power. Users will also be rewarded for participating in these referendums in addition to being able to dictate the direction of SwissBorg’s development.

    Protect and Burn

    The Protect and Burn policy rewards long-term CHSB holders by ordering buyback and burn only when CHSB prices are going down. This is because the traditional buyback mechanisms whereby buybacks are announced in advance, short term speculators could buy the token before the buyback and sell it for a higher price shortly after the buyback when the token supply is lowered. According to SwissBorg, this traditional mechanism does not protect the token and in particular long term token holders, and is contrary to their mission to promote innovation that rewards their loyal community members.

    Every month, SwissBorg will also add 20% of their profits generated from the fees on the Wealth App to a reserve so as to protect the price of the CHSB token. If the price of CHSB arrives as a bearish-zone (using the 20-day moving average as their indicator), SwissBorg will automatically place buy orders for CHSB.

    SwissBorg DAO

    The SwissBorg DAO (Decentralized Autonomous Organization) is the supporting body assisting with the governance of the SwissBorg ecosystem. A DAO is a development in the cryptocurrency and DLT space, which permits a democratic mechanism to run or manage a project on-chain.

    The SwissBorg DAO acts as a unifying bridge between the team and community members, allowing the latter to play an active role in determining the direction of the project and be rewarded for their efforts in CHSB tokens.

    The team has defined different roles for community members to participate as. Here are some of these roles:

    Digital Artist

    A digital artist (more understandably a content creator) is a community member, tasked by the team, to develop arts, pictures, texts, presentations and videos etc. about the SwissBorg project.

    Translator

    A translator is an important member of the community, responsible for translating important documents or articles, related to the SwissBorg project. SwissBorg DAO leverages the power of incentivized multi-cultural participants to get one of the most difficult yet important jobs done. (mva.la)

    Promoter

    A promoter is responsible for spreading the word about the project on various social media platforms. They play an important role in increasing adoption and usage by promoting the project. Thus, also directly enhancing the value of the token.

    Moderator

    A moderator (better understood as an admin on forums and telegram groups) is responsible for regulating the communication on the SwissBorg’s project channels. The various duties include promoting a healthy discussion, removing inappropriate content, modulating the flow of discussion and enforcing group rules.

    Campaigner

    A campaigner (a real-world promoter) is responsible for networking with different people and organizing events, to better promote the project. They may hold group meetings, AMA’s, city meets, etc., to promote development and cohesion of the SwissBorg community.

    Business Introducer

    A business introducer (commonly understood as an ambassador) is a SwissBorg community member, who strives to arrange in-person meetings of the SwissBorg team with prominent influencers, investors, business partners etc.

    Cyber Virtuoso

    A cyber virtuoso (known as a developer) is responsible for developing tools, scripts, softwares etc. to help develop the SwissBorg ecosystem. They may also be tasked with creating step-by-step tutorials and supporting documents for the project.

    SwissBorg Wealth App

    The Wealth App is the principal and smart command-and-control centre of SwissBorg. It allows users to build, monitor, and manage their crypto portfolios, permitting easy and secure wealth management.

    The dashboard is simple but powerful and intuitive, taking the guesswork out of cryptocurrency investing.

    The users can fund their accounts with USD, EUR, GBP, and CHZ. The withdrawals can be made to the local bank of the user’s choosing. Furthermore, a limited number of crypto-assets are supported, in a similar manner to Coinbase, ensuring quality.

    However, new assets are regularly added, if they fit the inclusion criteria. The app is available on both IOS and Android operating systems.

    The smart engine offers users the opportunity to buy crypto-assets at the best rates and lowest slippage, from multiple exchanges. Furthermore, it is AI-powered, offering valuable insights about the investments (history, performance, deposits, withdrawals, etc.), which assists the user in making informed decisions.

    All of these features allow people to employ sophisticated techniques for portfolio management with relative ease.

    SwissBorg Smart Yield

    SwissBorg’s Smart Yield is a feature on its app which allows users to potentially earn passive income through Decentralized Finance (DeFi) and Centralized Finance (CeFi) platforms without much pre-requisite knowledge. The Smart Yield feature works with top platforms such as Compound, Curve Finance, Binance, Aave, and Uniswap.

    SwissBorg’s CHSB Yield 2.0

    SwissBorg’s latest CHSB Yield 2.0 program aims to be a community-centered and sustainable approach to promote the growth of the SwissBorg ecosystem. It has various yield tiers which according to the Team will provide attractive returns for CHSB token holders. Holding more CHSB in the yield program affects your returns. Currently, the lowest tier of holding 0-2k CHSB in their Standard Account generates a maximum of 12.58% yield. Those with the Genesis Premium account type can earn up to 25.17% yield.

    The difference between SwissBorg’s CHSB Yield 2.0 and their Smart Yield program is that Yield 2.0 is paid out of SwissBorg’s own treasury- i.e. an internal transfer. This means that there is no risk of DeFi hacks or impermanent loss (Learn what is Impermenant Loss in our video here). Also, with the reward structure of Yield 2.0, smaller holders benefit from accelerated growth whilst at the same time, larger CHSB token holders are rewarded in the long term.

    Conclusion

    SwissBorg ran one of the most successful fundraises back in 2017 and has delivered a powerful product. SwissBorg solves the major problem of managing wealth and making cryptocurrency investments accessible to everyone.

    The Wealth App offers a one-stop solution for crypto investments, combining deposit, buying, trading, management and withdrawal facilities, all under a clean and minimal interface.

    Moreover, SwissBorg is fully compliant with all relevant regulatory frameworks, which ensures that users can invest and take part in the digital assets field while being certain about the legality.

    The community-based democratic outlook of the team ensures that all members can take part in the evolving ecosystem. The product is currently available in more than 60 countries and with more to come, making it truly global.

    Sign up for SwissBorg with our exclusive link to get FREE CHSB!

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    Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.

  • Top Chart Patterns Every Crypto Trader Should Know

    Top Chart Patterns Every Crypto Trader Should Know

    Chart patterns are an integral aspect of Technical Analysis, but they require some getting used to before they can be used effectively. A chart pattern is a shape within a price chart that helps to suggest what prices might do next, based on what they have done in the past. Chart patterns tend to repeat themselves and can give you a real competitive advantage in the markets if you are able to learn to recognize them.

    The market is constantly changing. In many cases, it does not matter how you feel about it, it only matters how the market is going to feel about it.

    Market sentiment is a critical indicator to predict price movements and make investment decisions. An easy way to gauge market sentiment is by looking at chart patterns. They tend to repeat themselves, and once you are able to recognize them, it becomes easier to strategize your entries and exits.

    However, it is important to note that they are NOT a guarantee that the market will move in that predicted direction. It should only serve as a frame of reference for you to feel how the market moves.

    The most important thing to remember when using chart patterns as part of your technical analysis is that they are not a guarantee that a market will move in that predicted direction, they are merely an indication of what might happen to an asset’s price. Below are some of the most common chart patterns studied by technical analysts as they appear on the Bitcoin/USD chart:

    1. Head and Shoulders

    This is a bullish and bearish reversal pattern that has a large peak in the middle and smaller peaks on either side. The Head and shoulders pattern is considered to be one of the most reliable reversal chart patterns. This pattern is formed when the prices of the stock rise to a peak and fall down to the same level from where they had started rising. Again, the prices rise and form a peak higher than the last peak and again it declines to the original base. Prices again rise to form a third peak, which is lower than the second peak and from here it starts declining to the base level. When the prices break the baseline with volume then a bearish reversal takes place.

    Head and shoulders is a chart pattern in which a large peak has a slightly smaller peak on either side of it. Traders look at head and shoulders patterns to predict a bullish-to-bearish reversal. Typically, the first and third peak will be smaller than the second, but they will all fall back to the same level of support, otherwise known as the ‘neckline’. Once the third peak has fallen back to the level of support, it is likely that it will break out into a bearish downtrend.

    Head and Shoulders
    Head and Shoulders

    2. Double Top

    A double top is a bearish reversal pattern that traders use to highlight trend reversals. The price forms a peak and retrace back to a level of support. It will then climb up once again before reversing back more permanently against the prevailing trend. A double top is a bearish pattern as it signifies the end of an uptrend and a shift towards a downtrend.

    Double Top
    Double Top

    3. Double Bottom

    A double bottom is a bullish reversal pattern that is opposite to the double top. Price forms a peak and then retrace back to a level of resistance. It then forms a peak once more before reversing back from the prevailing trend. A double bottom is a bullish reversal pattern, because it signifies the end of a downtrend and a shift towards an uptrend.

    Double Bottom
    Double Bottom

    4. Wedges

    Wedges are bullish and bearish reversal as well as continuation patterns which are formed by joining two trend lines which converge. There are two types of the wedge, rising and falling. Both rising and falling wedges are reversal patterns, with rising wedges representing a bearish market and falling wedges being more typical of a bullish market.

    • A rising wedge is represented by a trend line caught between two upwardly slanted lines of support and resistance. This pattern generally signals that an asset’s price will eventually decline more permanently, which is demonstrated when it breaks through the support level.
    • A falling wedge occurs between two downwardly sloping levels. This pattern is usually indicative that an asset’s price will rise and break through the level of resistance.
    Wedges
    Wedges

    5. Cup and Handle

    The cup and handle pattern is a bullish continuation pattern that is used to show a period of bearish market sentiment before the overall trend finally continues in a bullish motion. The cup appears similar to a rounding bottom chart pattern. Following the cup, the price of an asset will likely enter a temporary retracement, which is known as the handle because this retracement is confined to two parallel lines on the price graph. The asset will eventually reverse out of the handle and continue with the overall bullish trend.

    Cup and Handle
    Cup and Handle

    6. Pennants

    A pennant pattern or a flag pattern is created when there is a sharp movement in the price either upward or downward. This is followed by a period of consolidation that creates the pennant shape because of the converging lines. Then a breakout movement occurs in the same direction as the big stock move. At the initial stock movement there is a significant volume which is followed by weaker volume in the pennant section and then rise in the volume at the breakout. Pennants can be either bullish or bearish, and they can represent a continuation or a reversal.

    Pennants
    Pennants

    7. Triangles

    Ascending Triangles

    The ascending triangle is a bullish continuation pattern which signifies the continuation of an uptrend. It can be drawn onto charts by placing a horizontal line along the swing highs, which acts as the resistance, and then drawing an ascending trend line along the swing lows, the support. Eventually, the trend breaks through the resistance and the uptrend continues.

    Ascending Triangles
    Ascending Triangles

    Descending Triangles

    Just like the ascending triangle, the descending triangle is also a continuation chart pattern. The only difference is that it is a bearish continuation pattern and it is created during the downtrend. They generally shift lower and break through the support because they are indicative of a market dominated by sellers. Descending triangles can be identified from a horizontal line of support and a downward-sloping line of resistance. Eventually, the trend breaks through the support and the downturn continues.

    Descending Triangles
    Descending Triangles

    Symmetrical Triangles

    Symmetrical Triangles are continuation chart patterns that are developed by two trend lines which converge. The symmetrical triangle pattern can be either bullish or bearish, depending on the market. In either case, it is normally a continuation pattern, which means the market will usually continue in the same direction as the overall trend once the pattern has formed. However, if there is no clear trend before the triangle pattern forms, the market could break out in either direction. This makes symmetrical triangles a bilateral pattern, meaning they are best used in volatile markets where there is no clear indication of which way an asset’s price might move.

    Symmetrical Triangles
    Symmetrical Triangles

    8. Chart Patterns to Identify Market Manipulation

    The “Bart Simpson” Pattern

    When we look at the Bitcoin chart in small time frames, one can identify sudden movements or ‘bump’ in one direction, followed by consolidation and a sudden ‘bump’ in the other direction that ends close to the base price. This phenomenon has given the name “Barts” because the asset’s price pattern looks like the head shape of the iconic Simpsons character, Bart Simpson.

    It is a familiar occurrence for Bitcoin, one noticed by investors time and again during volatile trading stretches. It appears as a result of hundreds-of-Bitcoin orders in a matter of minutes. The reason for these sudden pumps and dumps is likely to liquidate crypto margin traders, whether short or long, by manipulating the market. While some believe that this is done by the exchanges themselves, which is entirely possible due to the lack of regulations, this might be related to large crypto traders, commonly known as ‘whales.’

    Bart Simpson pattern
    Bart Simpson pattern

    Wyckoff Pattern

    The Wyckoff Pattern was first brought to light by Youtuber “Uncomplication” to unearth potential market manipulation by whales. The pattern was developed by Richard Demille Wyckoff, an early 20th-century pioneer in the technical approach to studying the stock market. The pioneering work of Richard D. Wyckoff was centered around the realization that stock price trends were driven primarily by institutional and other large operators who manipulate stock prices in their favor.

    Wyckoff proposed a heuristic device to help understand price movements in individual stocks and the market, which he dubbed the “Composite Man.” Wyckoff advised retail traders to try to play the market game as the Composite Man played it. The Composite Man attracts the public to buy a stock in which he has already accumulated a sizeable amount. Wyckoff and his associates believed that if one could understand the market behavior of the Composite Man, one could identify many trading and investment opportunities early enough to profit from them. Using Wyckoff’s method, one can invest in stocks by capitalizing on the intentions of the large “smart money” interests, rather than being caught on the wrong side of the market. 

    The Bottom Line

    Technical analysis can give cryptocurrency traders an insight into the past of crypto, facilitating future predictions. But sole reliance on technical analysis ignores sentiment or news. This is particularly problematic with cryptocurrency trading since factors like mining hash rates and governmental regulations can have significant impacts on the market.

    What is technical analysis?

    Technical analysis is a method of analyzing the price movements of a security or asset over time. It uses charts and other tools to identify patterns and trends in order to make predictions about future price movements.

    How does technical analysis work?

    Technical analysis works by looking at past price movements and using these to predict future price movements. This is done by looking at patterns in the data such as support and resistance levels, trend lines, and chart patterns.

    What are the advantages of using technical analysis?

    Technical analysis can be used to identify potential trading opportunities and to help traders make informed decisions. It can also help traders manage risk by identifying areas where they should exit their positions.

    What is support and resistance?

    Support and resistance are levels on a chart where the price of an asset has difficulty either breaking through or falling below. These levels can be used to identify potential entry and exit points for trades.

    What is a chart pattern?

    A chart pattern is a specific pattern that appears on a chart. Common chart patterns include head and shoulders, double tops and bottoms, and triangles. These patterns can help traders identify potential trading opportunities.

    How can technical analysis be used in cryptocurrency trading?

    Technical analysis can be used to identify potential trading opportunities in the cryptocurrency markets. By looking at past price movements, traders can identify patterns and trends that can be used to make predictions about future price movements.

    Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.

  • Crypto Futures Trading with FTX

    Crypto Futures Trading with FTX

    FTX EXCHANGE (INCLUDING FTX INTERNATIONAL AND FTX.US) ARE NO LONGER IN OPERATION

    Both exchanges have filed for bankruptcy. Subsequently, the exchange was “hacked” and more than US$600 million worth of cryptocurrencies drained. The hacker is strongly rumoured to be a former FTX employee. For more about how this story unfolded and the latest news, check out these articles:

    What is futures trading?

    Newcomers to cryptocurrency and digital asset trading must navigate a complex sector filled with acronyms and technical jargon, as well as dozens of ways to trade across multiple exchanges.

    One option newcomers may have heard of, and which they may want to learn more about is futures trading. 

    At first glance, this seems like a complicated way to invest, but the team at exchanges like FTX do their best to make the process as straightforward as possible.

    What are futures?

    Futures are a type of derivative financial contract that creates an obligation for the parties to exchange the asset at a price and date that is predetermined. 

    The buyer is obliged to buy that asset, and the seller has to sell the asset, even if the price of the asset has gone up or down. 

    Think of future trading as a fixed price sale in the future. You agree with someone on a price that is higher or lower than the current price, and then in the future, the sale gets executed at the same agreed price. 

    The underlying assets in the contract can be anything from a set of cryptocurrencies to real estate or any other commodity. The contracts are designed to have a detail of the quantity of the underlying asset, and also help in the execution of the trade on a trading platform. 

    Why is it called futures trading?

    Futures are generally named by the month they expire. For example, a January gold futures contract will expire in January and is based on gold as an underlying asset. Similarly, you can also find contracts for other commodities as well. 

    Traders usually use the term futures broadly for a whole asset class. However, there are multiple futures contracts available based on different assets. These future contracts include: 

    • Commodities such as crude oil, corn, wheat, and so on
    • US bonds, or any other government-backed financial bond
    • Precious commodities like platinum and gold
    • Index futures such as the Dow Jones Industrial Index

    Examples

    A very good example of a contract available on FTX is the Donald Trump 2024 futures contract. 

    This is a contract that allows traders to ‘bet’ whether Donald Trump will return to the White House following the next presidential election in 2024. 

    The contract expires on $1 if former president Donald Trump wins the 2024 election and it expires at $0 if he loses the election. The contract specifically also specifies other scenarios in which the contract expires early, for example, if he decides not to run in the future presidential election. 

    So if anyone invests $100 right now into the contract they will get 1063 positions of the contract which may become worth $1063 if Trump wins, and if he loses the amount would become zero. 

    The leverage used by the futures market is usually high. Leverage is a process in which a buyer can purchase the contract even if they enter it with a fraction of the contract’s value. The buyer only needs to come up with a fraction of the money, while the remainder is put up by the broker. 

    One of the most important things in futures trading is the exchange, where the whole trade gets executed and settled. As futures trading also involves physical exchange, it is important to have a good exchange with a stellar reputation backing up your trade. However, it should be noted most futures contracts are for people who speculate on the trade.

    Difference between options and futures contracts

    For people who are new to futures, it is important to understand there’s a difference between futures and options. An options contract does not put an obligation on the buyer or the seller. In the American way of doing business, it gives them the right to execute the trade before the expiration time, while in Europe the right is given after the expiration time. 

    In a futures contract, the buyer has to take possession of the underlying asset, and subsequently, the seller has to sell him that asset, they can settle for the cash equivalent. However, the trade has to take place. 

    The buyer also has the option of loading off their position any time before the trade expires to get rid of their obligation. This is one thing that is common in options as well as futures trading giving an advantage to the buyer to benefit from the leverage holder’s position before expiration. 

    FTX Exchange

    Hundreds of platforms deal with crypto futures trading, however, traders need to be careful about which one they choose. They need to select a platform based on their preferences. 

    FTX has been one of the most promising entrants in the futures trading domain and has been taking up market share. The platform is slowly gaining a lot of traction and is widely considered to be one of the best platforms for futures trading. So, if you are interested in futures trading, FTX should be considered. 

    FTX was founded by Sam Bankman-Fried in 2019. He is also the founder of Alameda Research, a cryptocurrency, and blockchain research company that creates specialized algorithms for trading cryptocurrency. He is also a high-profile trader and created FTX as a trading platform that specializes in margin trading, futures trading, and leveraged trading. The exchange is backed by Binance, the biggest crypto exchange in the world, in what has been termed as a ‘strategic partnership’.

    The FTX exchange was founded due to the SBF’s quest for a crypto trading platform that had it all from a trader’s perspective. He wanted a trading platform that put traders at the heart of the experience and designed FTX to cater to trader’s every need. 

    Simplicity, security, and abundance of features were made important parts of the FTX core philosophy. Even though the exchange was designed for traders, the UI/UX was kept simple and intuitive, so novices don’t feel overburdened.

    To get started with FTX exchange, check out our FTX Exchange Guide.

    What makes FTX futures different from regular futures?

    The futures trading on FTX is a little different from other exchanges that offer futures contracts. 

    FTX futures are settled using stable coins. The settlements are made using stable coins as collateral and regular crypto cannot be used. This means that the volatility of crypto has no real effect on the users. This also gives the users a USD-based settlement exposure which means that you can use USD as the base currency for all your collateral and contracts, without the need for a bank account. Being in the crypto space also makes it easier for the position to be shifted around.

    To avoid clawbacks, FTX futures has a unique program for providing backstop liquidity. The backstop liquidity is provided to accounts that are about to go bankrupt. This prevents the exchange from clawbacks. 

    Backstop liquidity is the assistance from the exchange that helps in creating a secondary source of funds for liquidity when the primary can’t cover it, in case of a bankruptcy event. It also stops the buyer from making additional payments to the seller in the case, which are called clawbacks.

    The margin calls on the platform are measured and careful which avoids exposure to major price dislocations and huge losses.

    How to post collateral?

    In FTX futures the collateral is based upon stable coins and you do not have the option to post collateral in other cryptocurrencies. The current stable coins that are accepted include TUSD, USDC, and PAX. 

    For you to deposit or withdraw collateral you can go to your wallet on the FTX exchange and deposit USDC, PAX, or TUSD in your wallet. You can deposit them through a credit card or wallet transfer as well. 

    All margins posted on the wallet are in USD in your wallet by default, even if you fund it with stable coins the balance is shown in USD. 

    The collateral has a weight difference for each stable coin, in the case of USD fiat, the weight is kept at 1 meaning you can keep the collateral at the same amount. However for USDT, it is 0.975, for BTC it is 0.95 and for ETH it is 0.9 which means for the collateral to be high you have to have more collateral. This means that for $100 invested in USDT the collateral is at $97.5 while for the equivalent amount in  BTC it is $95.

    You can use the same collateral pool for all of your positions, by default all currencies that include USD, non-USD fiat, stable coins, and some cryptos can be counted as collateral. Cross margin is used for the account as every sub-account has its collateral wallet which is central to that account. Sub-accounts are considered as accounts and each sub-account has its own collateral. If you want isolated margins you would need to create a sub-account for each margin pool.

    How do Futures expire?

    The futures contract expires based on the set date of expiration. For example, a quarter future contract will expire every quarter between 2 am and 3 am UTC. Once the futures contract has expired the collateral amount gets credited into the seller’s account.

    What are perpetual futures?

    Perpetual futures are based on contracts that have no expiration date. The perpetual contracts work hour-wise, with each hour the contract has a funding payment.

    This has a function of keeping the price of perpetual futures according to the index which is underlining it. The price can be kept stable without the position closing down or expiring. 

    How can I trade futures?

    FTX is simple, go to the FTX website and you’ll see the registration page. Simply sign up with the email address you want to create your account with.

    Sign up for FTX
    Sign up for an FTX account

    Once you have opened an account the next thing to do is to add funds to the exchange wallet. Depositing your funds into the FTX exchange can be done either through connecting it with an existing crypto wallet or you can deposit funds directly through using a credit card or a debit card.

    Once your funds have been deposited you can go to the ‘Markets’ tab on the front page:

    FTX markets
    FTX markets

    In the ‘markets’ tab, you would get the following view, where you can see different futures contracts listed. The FTX exchange offers the largest collection of altcoins futures in the business. 

    FTX markets page
    FTX markets page

    You can also see the timed futures, for example, December expiration futures, as well as perpetual futures in the list as well. 

    The exchange also offers futures on US-based stocks and commodities as well.

    FTX US stocks and commodities futures
    FTX US stocks and commodities futures

    Once you have decided you want to trade a future, you select the future you want to trade and you get taken to the console. The console looks something like this:

    At the middle of the console you can look at the trading window which has the graphs displayed. 

    The top right corner shows you the index details as well as the price of the futures contract, along with its expiration. The bottom right shows you details of the collateral you have available, and the leverage can also be set from there as well. 

    Coming down from the console you can come to the order book as well as the order execution tab and the market trades tab:

    The console of the futures tab is designed with professional traders in mind; the console has each functionality that a trader would require. 

    The traders can monitor the price through the grid as well as make reference lines on the console as well. You can also add a variety of indicators to the console. The index price shows you the average of all the exchanges in the area, it also shows you different details as well.

    Below the console window, you can take a look at the current positions you have in the market as well as the previous positions you have had.

    The futures trades can be made through the console easily by keeping the collateral in your wallets. Once you have the collateral you can start trading futures through the exchange easily. 

    Conclusion

    Hopefully, this guide has given you an insight into the world of futures trading and gives you an oversight of how traders can and do use this method to make money on digital asset markets.

    FTX is a great place to trade futures and to learn more about this exciting sector of digital asset trading, offering users a simple and easy-to-understand interface.

    As with all investments, people should take care and ensure they have an appropriate trading risk mitigation strategy in place to manage their portfolios. Always make sure you never invest more than you can afford to lose. The cryptocurrency markets are by their very nature extremely volatile, with prices moving much more sharply than traditional markets, both up and down. 

    Check out our other FTX guides

    Frequently asked questions

    Are there any fees for futures trading on FTX exchange?

    FTX uses a tiered fee structure for futures trading which starts at 0.020% for maker fees and 0.070% for taker fees. Frequent traders can get discounted trading fees up to 0.00% and 0.04% for maker and taker fees respectively.

    Can you trade crypto futures as a United States resident?

    This depends on the policies of each cryptocurrency exchange, but generally, residents of the United States are not permitted to trade crypto futures. A few exceptions are the Chicago Mercantile Exchange (CME) and the Cboe Options Exchange.

    Is crypto futures trading safe?

    Trading in crypto or Bitcoin futures, or even cryptocurrency trading generally involves risks. One notable risk is the inherent volatility of cryptocurrency prices which can fluctuate greatly on a daily basis. Combined with leverage trading, this can hugely amplify any losses you may suffer if the market does not go in the way you anticipated.

    How can you mitigate risks in crypto futures trading?

    Some traders use stop-loss or take-profit levels. These will close trades that are losses or before the market trend changes. These can help traders because it works automatically, so the trader does not need to be at their computer.

    Another way to mitigate risks in crypto futures trading is avoiding emotional trading. For example, some traders feel FOMO (Fear of Missing Out) or revenge trade by “doubling down” when making a loss in an effort to minimise the loss. Emotional trading can in fact lead to further losses because it is not well thought out and researched.

    Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.

  • Derivatives Trading with FTX Exchange: Ultimate Guide

    Derivatives Trading with FTX Exchange: Ultimate Guide

    FTX EXCHANGE (INCLUDING FTX INTERNATIONAL AND FTX.US) ARE NO LONGER IN OPERATION

    Both exchanges have filed for bankruptcy. Subsequently, the exchange was “hacked” and more than US$600 million worth of cryptocurrencies drained. The hacker is strongly rumoured to be a former FTX employee. For more about how this story unfolded and the latest news, check out these articles:

    Derivatives Trading is a lucrative market, it is estimated to be worth more than $1 quadrillion all over the world according to Investopedia. This insane valuation is possible because derivatives are available for every type of asset in the world, you have derivatives for stocks, commodities, physical assets, and even cryptocurrency. 

    According to Investopedia, the size is almost 10 times that of the gross domestic product of the entire world. It is important to understand that the notional value and the actual value of the derivatives market are two different things, which can explain such a high valuation.  

    What is Derivatives Trading?

    Diving into the cryptocurrency world can be overwhelming. You are immediately faced with an insurmountable wall of options and information on different types of trades. Each trade may or may not eventually make you money, however, each type of trade has its learning curve, complexities, and barriers to entry. 

    Newcomers may have heard about derivatives trading as a very good way of making money, and they might be curious about derivatives trading as an option to do this. However, as with anything, it is important to make sure you understand the basics first and ensure you have appropriate risk mitigation strategies in place if you do decide to invest.

    This article aims to set out how to learn about derivatives trading, and provides derivatives on FTX Exchange as an example.

    What are Derivatives?

    Derivatives, simply put, is a contract between two parties, the contract is based on an underlying asset which can be anything but. In the traditional sense, it is either a stock or a commodity. Derivatives are popular in the crypto market as well, as more and more traders emerge themselves in all that the flourishing market has to offer. 

    A derivative is not a type of trade rather it is a collection of a few trades. For example future contracts, swaps, options, and warrants, all of which are based upon a contract of an underlying asset. In derivatives trading, the contract is really important, and it is widely used by traders all around the world to hedge risk and commensurate rewards.

    Further details about derivatives

    You can think of derivatives as a secondary asset that represents a contract on the primary asset, so it is directly linked to the value of the primary asset which is called the underlying asset. 

    This may sound jumbled up and complex, however, derivatives are an advanced investing option usually used by experienced traders. 

    Derivatives have two main classes, namely: lock and options. The lock class is made up of swaps, futures, and forward contracts, these contracts are called lock contracts because the parties are locked in the contract up until the life of the contract expires. 

    For example, if a person specifies they will buy or sell a futures contract they have to buy it or sell it at the end of the expiration period. In the options class the holder has the right to buy or sell the asset as specified in the contract, but he is not obligated to do so. Meaning the buyer can hold off on buying the asset and only give the money that he is owed and the seller can also opt to not sell the underlying asset.

    Futures contracts

    Futures contracts are a type of derivatives trade in which the price of the underlying asset affects the contract. It is a contract, as the name suggests, in which the seller and the buyer sign a contract to exchange the asset at a predetermined date with a predetermined price that is set somewhere in the future. 

    Future contracts are based on the expiration date generally, for example, in stocks, future contracts are known based on the month they expire in. Futures contracts are also available for stocks, cryptos, and commodities.

    Equity options

    Equity options derive their value from the underlying stock, the equity options work on two types of trades: calls and puts. Call options are the type of trade in which the holder of the option has the right to buy the asset at a strike price (preset price) and also a time both of which are preset in the contract. In the Put option, the seller has the right to sell the asset on a price and date that is specified in the contract.

    Example of equity options

    It is really easy to understand how options work. For example, a trader anticipates a fall in the price of bitcoin so what he does is that he sells ‘put’ options for the asset to be sold at a certain price, which may be the price before the fall.

    The trader now has a hedge against the fall of the price, if at the time of expiration of the contract the price of the asset has dwindled further he does not lose money, thus creating a very comfortable space for him.

    Differences between options and futures contracts

    For people who are new to futures, it is important to understand there is a difference between futures and options. An options contract does not put an obligation on the buyer or the seller. In the American way of doing business, it gives them the right to execute the trade before the expiration time, while in Europe the right is given after the expiration time. 

    In a futures contract, the buyer has to take possession of the underlying asset, and subsequently, the seller has to sell him that asset, they can settle for the cash equivalent. However, the trade has to take place. 

    The buyer also has the option of loading off their position any time before the trade expires to get rid of their obligation. This is one thing that is common in options as well as futures trading giving an advantage to the buyer to benefit from the leverage holder’s position before expiration.

    FTX Exchange

    There are more than 1,000 crypto exchanges globally, each trying hard to break in and flip the market over its head and acquire a lot of customers. Yet only a select few have succeeded in the endeavor. 

    FTX has been one of the most promising exchanges, the exchange has in a very short time become the ‘go-to’ for professional traders, as it offers options other exchanges cannot. 

    As a result, it is one of the biggest derivative trading platforms for crypto in the world. It is highly recommended by crypto traders that have been working for a long time in the field. 

    FTX was founded by Sam Bankman-Fried in 2019. He is also the founder of Alameda Research, a cryptocurrency, and blockchain research company that creates specialized algorithms for trading cryptocurrency. 

    Learn how to get started with our FTX Exchange Guide.

    How to trade Derivatives on FTX Exchange

    As have previously published guides on how to add cryptocurrency in your wallet on FTX exchange, you can check it out over here. You would need cryptocurrency in your wallet to post collateral for futures so make sure you add some cryptocurrency to your wallet. 

    To trade futures on FTX you would first need to go to the markets tab at the top of the platform’s home page. 

    Once you have reached there you would be able to see the futures section, where several contracts would already be listed.

    In the section, you would be able to see almost all kinds of details about the futures, their expiration, price, trading volume, and the change in their value over the day as well. Along with crypto, you can also deal in futures contracts of US-based stocks and also some commodities as well.

    Once you choose the type of future you want to trade, you are taken to the console which has almost all the information one needs to trade the future.

    In the middle of the console, you can look at the trading window which has the graphs displayed. 

    The top right corner shows you the index details as well as the price of the futures contract, along with its expiration. The bottom right shows you details of the collateral you have available, and the leverage can also be set from there as well. 

    Coming down from the console you can come to the order book as well as the order execution tab and the market trades tab:

    Futures are a type of trade that is very complex thus requiring a lot of information on the console screen for traders to make a decision. Thus while the console may look clustered it is functional. 

    At the bottom of the console is the history book, where you can take a look at different positions you have had and the ones currently you are in. The data gives you a summary of the performance over time.

    The futures trades can be made through the console easily by keeping the collateral in your wallets. Once you have the collateral you can start trading futures through the exchange easily. 

    Trading options

    Options are traded just like futures on the exchange, a topic that has already been covered on the website. You can either go long or short on a particular contract and the settlement is made at the end equal to the expiration price.

    Expiration of Contract

    FTX’s options are usually settled in USD, it is important to note that on FTX the price of a particular cryptocurrency is based on the FTX crypto index’s average at any time one hour before expiration. This is a common practice to beat volatility in the market. 

    Let’s just assume you short sell two options of BTC each priced at around $300, now the BTC expiration price according to the contract is $35,200. That means that your option is worth $200. 

    Your option gives you the right to buy BTC at $35,000. Now, if the contract expires as such, after expiration you will have essentially a profit of $400 based on your holdings, which means that the $200 above the price of the BTC translates to the $400 profit that you will get at the end.  

    Buying and selling options on FTX

    To trade options on FTX exchange you first need to go to the Options section of the platform. The options can be curated based on the requirements you set.

    You can create an option based on your requirements and request a quote on the platform which is the most common way of buying options. 

    There are many people on the platform checking the requests and within 10 seconds you might find a responder to your bid. Then it is up to you to accept, as soon as you accept the quote the contract starts. 

    You can look at the requests you have opened in the ‘My Requests’ section. 

    Quoting Options on FTX

    Quoting is also really simple, you can look at the requests for quotes posted by people on the platform, you can take a look at the requirements set by them and give them a quote. Whichever quote is a better deal would be shown to the person who makes the request. 

    It is important to note that you have no idea if the person posting the request is buying or selling, you have to provide a quotation for both scenarios.

    You can see the requests for quotes in the ‘All Requests’ section.

    Conclusion

    As discussed, FTX was founded as a tool for crypto traders who didn’t have a lot of options to start trading with. Over time the exchange has developed a curated set of options for its customers. 

    The platform is very stable with a  focus on simplicity and minimalism, nothing on the platform is without a purpose. The simplicity makes it very easier for people to start trading on FTX. 

    However, it should be pointed out that futures and options trading are advanced levels of investing and require lots of research, reading, and learning before starting to invest. 

    It is a good way of hedging your risks in the market, however, you should only trade at the start with the money you can afford to lose, reckless investing is not the way to go about it. Hopefully, this guide will help you get started on your crypto trading journey. 

    Check out our other FTX guides

    Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.

  • How to save money on crypto exchange fees

    How to save money on crypto exchange fees

    Fees are an unavoidable part of cryptocurrency trading- or are they? Charged by cryptocurrency exchanges on each trade or transaction on their platform, these fees can add up to quite a substantial amount, especially during the bull market when people are actively trading. Therefore, people are eager to find any way to save money on cryptocurrency trading fees, and to maintain competitiveness, many exchanges do offer discounts or perks for their loyal customers. In this article, we take a look at some of the ways in which you can lower or even have no trading fees, and the discounts offered by some cryptocurrency exchanges.

    What are crypto exchange fees?

    Cryptocurrency exchanges charge customers fees for transactions or trades done on their exchange. Some types of crypto exchange fees include:

    Deposit/withdrawal fees

    Exchanges are basically a platform for customers to trade cryptocurrencies, so they would need to deposit or withdraw cryptocurrency to the exchange platform in order to use it. Exchanges charge a fee when customers deposit or withdraw cryptocurrencies onto or from their platform.

    Trading fees

    This is charged by exchanges whenever cryptocurrencies are converted to other cryptocurrencies or fiat, and vice versa.

    Most popular exchanges such as Binance charge trading fees based on a maker/taker structure with taker fees being higher than maker fees. Takers are when the user places an order that is able to trade immediately (whether partially or fully) before it enters the order books. They are known as “takers” because they “take” volume from the order books. On the other hand, maker fees are charged when the user places an order that goes onto the order book (whether fully or partially) i.e. “making” the market.

    Interest/Borrowing/Liquidation Fees 

    These fees are charged when users are involved in margin trading i.e. borrowing funds to increase your position. The amount of these fees usually depends on the amount borrowed on margin together with an interest rate. Margin trading however is very risky, and one of the reasons for this is because if the trade does not go your way you would become liquidated. When this happens exchanges also charge a liquidation fee.

    VIP programs

    Exchanges usually offer exchange fee discounts for their frequent users. This is usually based on a VIP tier structure where frequent users (based on their trading volume over 30 days) can qualify for higher VIP tiers which entitle them to cheaper fees. The requirements for the VIP tiers and discounts offered differ between exchanges.

    Binance’s VIP program requires users to have a certain trade volume over 30 days and have a specified balance of their native token known as Binance Coin (BNB). For the first VIP tier, users must have a trading volume of 50 BTC or more and hold 50 BNB or more. Check here for more details.

    Coinbase does not have a VIP program. However, Coinbase charges a fee for withdrawing from their platform and for transactions. The fees are calculated based on several factors such as the payment method, size of order and market conditions etc. The amount of such fees will be disclosed at the time of the transaction. Learn more about Coinbase fees and how you can avoid them.

    Kraken does not publicise their VIP program but users can email them to enquire about their Account Management services.

    Exchange token discounts

    Many exchanges have their own native token, and holding their token entitles users to discounts.

    Binance Token (BNB) is Binance’s native token. Binance allows users to pay for trading fees using BNB, and by doing so users can get 25% off both trading and margin trading fees, and 10% off futures trading fees.

    Woo X for instance also has their native WOO token. Users can enjoy discounts on maker/taker fees by holding as little as 300 WOO tokens, and only 1,800 WOO tokens are required to reach 0% maker and taker fees. The WOO token can also be used for yield farming and as collateral for borrowing and lending on various DeFi platforms. Click here for more details.

    Both Coinbase and Kraken do not have their own native token.

    Discounts for staking exchange tokens

    Some exchanges allow users to stake the native token i.e. to lock the token up for a specified period in return for additional rewards. Some rewards include fee discounts, additional tokens (i.e. yields), increased airdrop rewards and the ability to participate in the exchange’s initial exchange offerings (IEOs).

    Binance also allows users to stake their BNB in their Vault in return for BNB yields. Whilst there are no direct perks for staking BNB, as mentioned previously Binance users get 25% off trading fees when they pay with BNB.

    WOO X users are required to stake their WOO tokens in order to enjoy the trading fee discounts mentioned in the previous section. Other rewards for staking include eligibility for airdrops.

    Neither Coinbase or Kraken offers staking in their exchange token.

    Conclusion

    Cryptocurrency exchange fees can add up especially when you are a heavy user. With the many exchanges out there, competition is fierce to attract users since they make money on each transaction you do. One of the major ways to do this is to offer discounts on fees for using the exchange. Most, if not all cryptocurrency exchanges offer discounts simply for frequent or high volume users with tiered VIP programs. Exchanges such as Binance are more creative, utilising their native token or having staking programs which boost users’ rewards. At the end of the day, the rewards offered are only one aspect to consider when deciding which exchange to choose, other factors include the number of cryptocurrencies supported and security etc. Intended users, especially those from the US, should also check carefully as some exchanges may have features that are not available to US citizens.

    Further reading

    Coinbase Fees-How to avoid them

    Coinbase Review

    Binance Exchange Review

    Tips and tricks to save on your Ethereum gas fees

    Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.

  • Top Best Cryptocurrency Exchanges in 2022

    Top Best Cryptocurrency Exchanges in 2022

    This is an update of our previous top crypto exchanges article for 2021. A lot has changed since then and here’s what to look for in 2022.

    The easiest way to start trading cryptocurrencies such as Bitcoin is through a cryptocurrency exchange, and in this article, we list what we consider to be the top cryptocurrency exchanges in 2022 with the beginner user in mind. For this article, exchanges which we at Team Boxmining use frequently are listed in Tier 1, exchanges we occasionally use are listed in Tier 2, down to those which we seldom or do not use at all are listed in Tier 3. However, this is only based on our personal preference only. Potential users should also always check if the exchange is supported in their country as there are geographical restrictions. 

    Check out our latest video where we talk about our picks for the best cryptocurrency exchanges in 2022:

    https://www.youtube.com/watch?v=YRocD5PqvZ8
    Best Cryptocurrency Exchange in 2022? (EXCLUSIVE trading fee discounts)

    Tier 1 Exchanges

    Binance

    Founded in 2017 and currently serving over 13.5 million active users worldwide, Binance allows you to buy, sell, and trade cryptocurrency with low fees. You also have the option to earn interest on your cryptocurrencies by staking them for a period of time to earn an interest rate of between 0.5%-10%.

    Binance supports trading of over 400 different types of cryptocurrencies and with more being added almost every week. In fact, Binance has become so popular as a cryptocurrency exchange that the mere news of new coins being listed can cause the tokens’ prices to skyrocket. 

    Cryptocurrencies can be purchased on the Exchange through a variety of ways: PayPal, bank transfer, credit card, and debit card (although they charge a hefty 4.5% fee). It is worth noting however, that users cannot simply exchange their US dollars for cryptocurrencies. Nevertheless, the aforementioned purchase methods should be sufficient for most, if not all cryptocurrency traders.

    As for security measures, Binance not only has an asset fund as insurance in case of misappropriated user funds but also provides two-factor authentication.

    Binance also has its own native token- BNB, which comes 4th in terms of trading volume. The token can be used for various features and discounts on the exchange.

    Binance does have a US version of its exchange for US users at Binance.US which was launched in September 2019. Although Binance.US will have fewer cryptocurrencies available for trading and features in order to be compliant with US regulations.

    Binance is Team Boxmining’s second most frequently used exchange. Binance is easy to use, their team is always quick to respond if there are any issues with the exchange, and pioneered many of the special features we come to expect today such as Initial Exchange Offerings (IEOs). Binance also caters to experienced traders with advanced trading options and plenty of analytics. Novice users will inevitably experience a learning curve, but once you find your way around, it becomes almost second nature.

    Check out Binance Exchange Review 2021: Best Crypto Exchange? For a detailed look at what Binance has to offer. 

    Sign up for Binance here!

    KuCoin

    kuCoin exchange
    Its focus on security and intuitive design has attracted fervent supporters for KuCoin

    KuCoin is a relatively new cryptocurrency exchange that has quickly developed a fervent fan base thanks to its intuitive design and high level of security. The Exchange is highly regarded for its large number of different cryptocurrency pairs, which means users can purchase a wide variety of cryptos. 

    The Exchange is also spreading into new regions at a rapid pace. In just 1 year their adoption rate for different countries has skyrocketed. For example, in Latin America, there was a 171% increase, in Africa a 130% increase, and in Asia a 67.5% increase.

    KuCoin supports over 500 cryptocurrencies which means you can trade lots of small-cap tokens with low trading fees. At team Boxmining, we find that if we want to trade small-cap coins, we would need to use our MetaMask and then trade on different platforms and different DEXs. And if it’s an ERC 20 token you would have to pay ridiculously high gas fees which are really not practical. So, if these small-cap tokens are already on KuCoin, then you can save yourself a lot of unnecessary costs.

    KuCoin also allows you to use trading bots through their mobile app. Trading bots can
    automatically buy and sell your cryptocurrencies so you don’t have to be online all the time to follow the market. However, it’s not always clear how they’re investing your money, and you need to understand the cryptocurrency trading strategies they use. Also, if you’re buying and holding cryptocurrencies for the long term, these bots may not be able to help you a lot.

    On the downside, Kucoin is a crypto-only exchange, which means you will need another exchange if you’re looking to purchase coins with fiat currency such as HKD, USD or CAD. That means that Kucoin is not a great option for anyone just getting started with cryptocurrency, but if you are an experienced trader then KuCoin is a great way to diversify your cryptocurrency portfolio.

    SwissBorg

    SwissBorg
    SwissBorg is a popular choice amongst European users and has a very intuitive and user-friendly app.

    SwissBorg was launched in December 2017, they are based in Switzerland and are fully compliant with Swiss Law, making them hugely popular amongst the European cryptocurrency trading community. The Exchange is available in over 100 countries (although currently not supported in the US). Please note however that for some countries, the full range of features offered by SwissBorg may not be available.

    SwissBorg supports over 30 cryptocurrencies and 16 fiat currencies. New cryptocurrencies are continuously being added and users can vote for the next cryptoasset to be listed on their app. Users can directly fund their SwissBorg accounts via bank transfer, and SwissBorg does not charge any fees for bank transfers.

    Another popular feature is SwissBorg’s multi-award-winning app which allows users to access their crypto wallets and trade on the go.

    To keep ahead of the yield farming and decentralized finance (DeFi) craze, SwissBorg offers their Smart Yield account for yield farming, which allows users to get exposure to farming without much prerequisite knowledge. The Smart Yield feature does this by scanning and finding a range of DeFi and CeFi (Centralized Finance).

    SwissBorg’s native token $CHSB is a multi-utility token that entitles holders to lower fees when buying/selling Bitcoin, CHSB and stablecoins on the Exchange. Other benefits include being able to have 2x yield on your USDC, BTC, ETH, XRP, and CHSB holdings.

    Learn more about SwissBorg with our in-depth guide- SwissBorg ($CHSB): What is it?

    Sign up for SwissBorg with our exclusive link to get FREE CHSB!

    Coinbase

    coinbase exchange
    Coinbase offers a more limited selection of cryptocurrencies but makes up for it with high security and ease of use

    Coinbase was launched in 2012 and currently has over 30 million users spanning 103 countries. While Coinbase may not offer a wide variety of cryptocurrencies, the San Francisco-based exchange platform is still a top favorite among many investors due to its highly secure and easy-to-use platforms. Also, Coinbase is the first stop for many beginner traders (especially those from the US) as they have a very easy-to-use mobile app, you can directly fund your Coinbase account from your bank account. Coinbase is also particularly popular in the US since it is the first publicly listed US crypto exchange and it is compliant with US regulations.

    Coinbase’s popularity stems from the fact that their platform has one of the fastest and easiest cryptocurrency buying processes, which along with their claim to have never been hacked, makes them an ideal choice for beginners who are looking to get started with cryptocurrency investment. Advanced users can also opt for Coinbase Pro, which has more trading features.

    Coinbase supports hundreds of digital currencies, however, in terms of the number of cryptocurrencies supported, it definitely loses out to other major crypto exchanges in this respect. Coinbase also charges higher fees compared to most other exchanges, charging $0.99-$2.99 per purchase under a $200 transaction and an additional 0.5% fee depending on the amount traded. However many novice or infrequent traders consider this a fair price to pay for the convenience the platform offers and the fact that it is one of the few exchanges available to US users.

    As mentioned earlier, Coinbase does charge higher fees compared to other cryptocurrency exchanges on the market, hence we have prepared our popular guide- Coinbase Fees: How to Avoid Them.

    Tier 2 Exchanges

    eToro

    Established in 2007, eToro was originally a social trading exchange that launched its cryptocurrency platform in 2018. It has since grown to a user base of over 17 million users worldwide.

    The main factor to note about eToro is that it is extremely simple to use, which can be both positive and negative. eToro currently only offers the 6 major cryptocurrencies: Bitcoin, Bitcoin Cash, Etherium, Litecoin, XRP, and XLM. This means that the platform is perfect for those looking to trade in only the biggest cryptos using a simple interface.

    In addition, the only fiat that this exchange deposits in is USD, which works out great if you are a US-based trader but not so much if you’re interested in dealing with other currencies.

    Whilst we at Team Boxmining do not use eToro, our friends who only occasionally trade cryptocurrencies are big fans due to its simplicity. However, the downside is the lack of supported cryptocurrencies, features and trading discounts. 

    Kraken

    One of the more established cryptocurrency exchanges, Kraken was founded in 2011 then relaunched in 2013. Kraken has a wide variety of cryptocurrencies available for trade, and currently supports over 200 traders globally.

    Kraken also offers margin trading and futures trading. With its margin accounts, you can borrow up to five times your account balance to trade crypto assets. Futures trading — contracts which allow you to buy or sell an asset at a set price on an upcoming date — is available for Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and Ripple.

    The Exchange also offers its own futures trading platforms. But institutional clients can take advantage of expert insights, one-on-one consultations, account management support, and more.

    Kraken is hugely popular amongst European cryptocurrency enthusiasts due to its range of features. 

    Tier 3 Exchanges

    OceanEx

    OceanEX was launched in 2018 by BitOcean Global, a fully registered and licensed Japanese trading platform. BitOcean Global consists of core members with past experience from Morgan Stanley, BNP Paribas, and Deloitte. 

    With a variety of features to improve user and trading safety, OceanEX is the trading hub of the VeChainThor Ecosystem. The main advantages promoted by OceanEX are its AI security, tailor-made services, lightning fast trading, and global support. However, the platform lacks liquidity which makes buying and selling coins difficult.

    Coincheck

    coincheck exchange
    Coincheck is the go to if you’re living in Japan

    Coincheck is a Japanese-based cryptocurrency exchange founded in 2012 that also functions as a Bitcoin wallet. The platform is simple and user-friendly and boasts competitive fees, along with features such as cashback for paying utility bills. However, the coins available for trade are limited, and the majority of the additional features are available in Japan only. 

    Tier 4 Exchanges

    Bisq

    bisq exchange
    Bisq does not require user verification, which for some people is a security risk

    Launched in 2014, Bisq is a decentralised exchange with servers distributed worldwide and offers a large variety of cryptocurrencies and fiats for trading.

    However, unlike other exchanges Bisq does not require verification of user accounts, which raises the question of trader safety.

    HitBTC

    hitbtc exchange
    HitBTC also raises security concerns due to the nature of their KYC processes

    Designed for the more experienced trader interested in dealing with altcoins, HitBTC was founded in 2013 and based in Chile. 

    Main concerns surrounding HitBTC are the lack of transparency and clear KYC (Know Your Customer) processes, which raises red flags about the security of the platform. In addition, users have reported that support is slow, with resolutions of issues taking up to several weeks. 

    Conclusion

    Tier 1:

    • Binance
    • KuCoin
    • SwissBorg
    • Coinbase

    Tier 2:

    • eToro
    • KuCoin

    Tier 3:

    • OceanEx
    • Coincheck

    Tier 4:

    • Bisq
    • HitBTC

    Of course, this list is meant to be a guide when selecting the best cryptocurrency exchange for your individual needs, and conducting thorough research and background checks will go a long way in protecting your digital wealth. Be sure to spend some time when choosing your own exchange, and you can enjoy the peace of mind knowing that your coins are in the right hands. 

    In addition, exchange fees are usually a huge factor in choosing which exchange to use. Hence we have compiled our ESSENTIAL guide on How to Save Money on Crypto Exchange Fees.

    Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.

  • Binance futures trading: How to guide

    Binance futures trading: How to guide

    Crypto futures trading allows traders to have exposure to cryptocurrencies without the need to own the underlying crypto asset. Binance exchange offers futures trading to users through Binance Futures, which has 279 trading pairs. This article provides a guide on how to trade on Binance Futures.

    Get 20% off fees when signing up for Binance with the following link!

    What is Binance?

    Binance was launched in 2017 and is arguably the world’s most popular centralized cryptocurrency exchange. It has over 2 billion average daily volume and 72 million site visits daily. The Binance ecosystem includes Binance exchange, BNB Chain, Trust Wallet, Binance card, and other services.

    What is crypto futures trading?

    Crypto futures contracts create an obligation for parties to exchange the asset at a predetermined price and date. On most cryptocurrency exchanges, however, the parties can settle for the cash equivalent. But, the trade must take place. 

    Traders use futures trading to profit from market movements by going either “long” or “short” on a futures contract. Going “long” means that a trader purchases a futures contract expecting it would increase in value in the future. And if the value of the cryptocurrency does increase, the long trader would profit. On the other hand, a trader going “short” means they are hoping prices will drop.

    Learn more about crypto futures trading with our guide- Crypto Futures Trading: What is it?

    What is Binance Futures?

    Binance Futures allows users to trade crypto futures contracts on Binance. It has 279 trading pairs and has the second-highest 24-hour trading volume amongst all crypto derivative exchanges. Binance Futures offers USDⓈ-M Futures and COIN-M Futures. These are perpetual or quarterly contracts settled in USDT/BUSD, or cryptocurrency respectively.

    Binance Futures also has interesting features such as a leaderboard, showing traders with the highest ROI or PNL. Other traders can follow these top traders and see what positions they are holding, as well as copy their trades.

    For traders who are more competitive, Binance Futures has a battle mode where you can guess whether prices will rise or fall within the next 1 or 5 minutes. Then, you will be matched with another player who predicted in the opposite direction. Players will still gain points regardless of whether they win or lose. Points can then be used to earn further rewards.

    Binance Futures trading fees

    Binance uses a maker-taker fee structure. Maker trades are orders that go on the order book partially or fully e.g. limit orders. Taker trades are executed immediately before entering the order book. Market orders are a type of taker trade. The fee charged depends on which type of trade. As maker trades add volume to the order books and thus “make” the market, it is in an exchange’s interest to have more of these orders. Therefore, maker fees are usually lower than taker fees.

    Binance also has a 9-tier VIP structure which offers progressively lower fees for users with high trade volume and substantial BNB holdings. Users who use BUSD, Binance’s USD stablecoin, or BNB for settling fees are also rewarded with lower trading fees.

    The lowest tier, i.e. “Regular users” are traders with a past 30-day trading volume of less than 15 million BUSD or hold 0 BNB. For regular users, the maker/taker fee for USDⓈ-M futures trading is 0.02%/0.04%, and for COIN-M futures, the maker/taker fee is 0.01%/0.05%.

    Highest tier users i.e. VIP 9, users must have a past 30-day trading volume of over 25 billion BUSD and hold over 5,500 BNB. VIP 9 users enjoy a maker/taker fee of 0.00%/0.017% for USDⓈ-M futures trading, and for COIN-M futures, the maker/taker fee is -0.009%/0.024%.

    Binance futures trading fees
    Binance futures trading fees (Source: Binance)

    Extra discount! Enjoy 20% off fees when signing up for Binance with the following link!

    Pros and advantages of trading on Binance Futures

    Binance is one of the leading cryptocurrency exchanges. According to CoinGecko, Binance has the second-highest trading volume with over US$35 million being traded in 24 hours. Here are some of the pros and advantages of crypto trading on Binance Futures:

    • Many trading pairs. Binance Futures have 279 trading pairs, giving traders a wide range of options from popular cryptocurrencies such as Bitcoin ($BTC), to meme coins such as Shiba Inu ($SHIB).
    • Low trading fees and generous fee structure. Maker/taker fees start at 0.02%/0.04%. However, Binance Coin ($BNB) and BUSD holders, and high-volume traders are entitled to discounts, bringing trading fees to as low as 0.0100%/0.0207%.
    • Low minimum trade amount. Traders can start with a minimum trade amount of 0.001 BTC on the BTCUSDT Perpetual market.
    • Binance offers up to 100x leverage. This allows more experienced traders to potentially maximise their gains.
    • Binance has trading tools such as Grid Trading, TWAP, Advanced TP/SL, and Multi-Symbols Trading Page for maximum trading efficiency.

    Cons and disadvantages of trading on Binance Futures

    • Futures trading is not available in the US. So US traders will need to use other exchanges for futures trading.
    • Users must pass the verification process in order to begin using Binance Futures.

    Is Binance Futures trading safe?

    Binance has a US$300 million Insurance Fund to protect traders. The Fund acts as a safety net to protect bankrupt traders from adverse losses whilst ensuring that winning traders are paid in full. The purpose of Binance’s insurance fund is to limit counterparty liquidations. Counterparty liquidations are where the positions of opposing traders are automatically liquidated in order to cover a bankrupt trader’s position. The insurance fund takes the remaining positions when a trader in liquidation has less than 0 USDT after all their positions are liquidated. These remaining positions would be offloaded onto the market gradually and liquidation fees will be collected from users that do not result in bankruptcy.

    Binance also has a Cooling-Off Period function to help traders prevent compulsive trading behaviours. It works by preventing traders from trading futures-related products on the exchange for a predetermined period.

    How to start trading on Binance Futures

    Trading on Binance Futures only requires 5 simple steps.

    1. Sign up for a Binance Account

    To sign up AND get an additional 20% off trading fees click here.

    Alternatively, on the Binance main page, click register and enter your details. Don’t forget to fill in GQWT3T1T for the Referral ID in order to be eligible for 20% off trading fees.

    You can sign up with your phone, email, Google, or Apple accounts.

    2. Open a Binance Futures account

    Go to Binance Futures and click Open Now, if prompted, you can enter GQWT3T1T as the Futures referral code in order to enjoy 20% off trades. Then, complete and get all the answers correct on the 14-question quiz on how to use Binance Futures.

    3. Complete the verification process

    Click Profile and then Verification. Follow the steps and fill in your personal information. A government-issued ID (e.g. a passport) and address proof must be provided, and you must also pass the facial recognition test.

    4. Make a deposit into your Binance account

    Binance allows you to deposit fiat or cryptocurrencies into your account. To deposit, click on your profile and go to Dashboard. Under Fund your Account, you can choose to Buy crypto using Mastercard, Visa, Google, or Apple Pay. Users can also choose to Deposit crypto from other exchanges or their hardware wallet.

    5. Start trading

    On Binance Futures, choose between USDⓈ-M and COIN-M Futures Contracts. On the top left-hand corner (marked in yellow), you can choose which futures contract to trade.

    Choose which futures contract to trade
    Choose which futures contract to trade (Source: Binance)

    On the left-hand side, there are various tools to help you identify patterns or trades such as trend lines, arrows, or Fibonacci retracement. You can use these tools to annotate your charts.

    Binance Futures chart tools
    Binance Futures chart tools (Source: Binance)

    On the top right-hand side of the page, you can select the Margin Mode. Users can choose between Cross or Isolated margin modes. Cross-margin mode means that the entire margin balance will be shared across open positions. However, if there is a liquidation event, the risk is that their entire margin balance and any open positions may be lost. Isolated margin mode, on the other hand, allows traders to manage their risk on individual positions by restricting the amount of margin allocation. The benefit of isolated margin mode is that if a position is close to being liquidated, users can allocate additional margin to that position.

    Set your Leverage (if any) by clicking on the top right-hand corner. Traders can set the leverage from 1x to 125x. However, traders should be careful that setting high leverage could result in significant losses in the event of a liquidation.

    On the right-hand side of the page, you can also select the type of order (e.g. Limit, Market, Stop Limit, etc), the order price, and size. For a more automated yet managed trading experience, traders can also select TP/SL i.e. when to take profits, or stop loss. Finally, traders need to select between a Buy/Long, or Sell/Short order.

    Is Binance Futures safe?

    Binance Futures comes with security features expected from every reputable cryptocurrency exchange. Binance Futures requires users to have passed the KYC verification before they can start trading. Before trades are executed, users must also have enabled 2FA authentication and will be sent an Anti-Phishing Code for verification.

    Binance Futures also has a nearly US$300 million insurance fund to protect bankrupt traders from adverse losses. It also ensures that profits of winning traders are fully paid out.

    Finally, if users really need help, Binance offers customer support in 17 different languages via Live Chat or email.

    Conclusion

    Trading futures contracts are a great way for cryptocurrency traders to profit from fluctuations in cryptocurrency prices. Furthermore, Binance Futures is a popular exchange for traders of any level to trade futures since they have a large number of trading pairs. Binance Futures also has the benefit of a huge insurance fund, helpful tutorials, and customer support to ensure that customers have a straightforward and secure trading experience.

    Enjoy 20% off fees when signing up for Binance with the following link!

  • Crypto Futures Trading: What is it?

    Crypto Futures Trading: What is it?

    Crypto futures trading is a type of derivative financial contract. It creates an obligation for the parties to exchange the crypto asset at a predetermined price and date. In this article, we look at what is crypto futures trading.

    What is futures trading?

    Futures are generally named based on the month they expire. For example, a March crude oil futures contract will expire in March and is based on crude oil as an underlying asset. You can also find contracts for other commodities. 

    Traders use the term futures broadly for a whole asset class. And there are multiple futures contracts available based on different types of assets. For example: 

    • Commodities such as crude oil, corn, and wheat;
    • US bonds, or any other government-backed financial bond;
    • Precious commodities like silver and gold; and
    • Index futures such as the Dow Jones Industrial Index.

    For example, a BTCUSD quarterly contract uses BTC as an underlying asset and expires quarterly.

    What is crypto futures trading?

    In crypto futures trading, traders can gain exposure to cryptocurrencies without actually needing to possess the underlying crypto asset. However, there are risks involved with futures trading such as high price volatility.

    Traders use futures trading to take advantage and profit from market movements by going either long or short on a futures contract. Going “long” means that a trader purchases a futures contract expecting that it would increase in value in the future. On the other hand, a trader going “short” means they are hoping prices will drop.

    Here is an example of a futures contract:

    Adam enters into a long futures position when BTC was trading at US$15,000 whilst Bob enters into a short futures position. BTC prices rose to US$20,000 and both Adam and Bob agree to settle their positions. For Adam, BTC was worth more at settlement than when he entered the long position. So Adam makes a profit of US$5,000 from the exchange, being the price difference between the two times. On the other hand, Bob is holding a losing trade since he was holding a short position. So Bob must instead pay the exchange the deficit loss of US$5,000.

    Crypto futures trading
    Crypto futures trading (Source: Binance)

    Difference between options and futures contracts trading

    Futures and options contracts are not the same. An options contract does not impose an obligation on the buyer or the seller. Rather, an options contract gives the parties the option to buy or sell a crypto asset at a fixed price on a specified expiry date. There are 2 types of options contracts: call contracts which give traders the right to buy, and put options which give traders the right to sell.

    On the other hand, in a futures contract, the buyer has to take possession of the underlying asset, and the seller has to sell that asset. The parties can settle for the cash equivalent, which is what happens on most cryptocurrency exchanges. However, the trade must take place. 

    Pros of crypto futures trading

    Here are some benefits (pros) of crypto futures trading:

    • Crypto futures contracts allow traders to gain exposure to cryptocurrencies and possibly profit from their price movements without holding the cryptocurrency itself.
    • Traders can bet against the direction of the market and profit from it. Long traders predict the price of a crypto asset will increase. Whist traders which go short would profit if prices drop.
    • Trading crypto futures with leverage allows traders to potentially have more gains with only a fraction of the total cost. This, however, comes with risks.

    Cons of crypto futures trading

    Here are some risks (cons) of crypto futures trading:

    • Cryptocurrency markets can be very volatile. And unlike traditional markets, cryptocurrencies are traded 24 hours a day. This means traders must constantly check the direction of the market.
    • Leveraged trading is very risky and could lead to substantial losses.

    Conclusion

    Crypto futures trading is a good way to gain exposure to cryptocurrency trading without holding the underlying cryptocurrency. It is also a hugely popular financial product that is offered on most crypto exchanges. Traders however should take extra care and ensure they have appropriate trading risk mitigation strategies in place to manage their portfolios. You would never invest more than you can afford to lose, especially when cryptocurrency markets are by nature extremely volatile.