Bybit is a cryptocurrency-based exchange that launched its services at the end of 2018.
Exchanges give traders the ability to trade in endless Cryptocurrency agreements with up to 100:1 leverage. In their short time of operation, exchanges have been able to generate significant revenue.
However, can such a new exchange be trusted?
In this Bybit update, we will give you everything you need to know about the exchange. We will also give you some top tips when it comes to trading the future of crypto.
Bybit is P2P cryptocurrency futures exchange that is based in Singapore. The exchange operates under Bybit Fintech Limited which is a company that is registered in the British Virgin Islands.
In their about us page, the exchange claims that they have a team which is comprised of experts in blockchain technology and finance. For example, their technology team has people who hail from Morgan Stanley, Tencent etc. You can check them out on linkedin.
The primary product offered on the exchange is perpetual futures products with 100:1 leverage. This means that they are trying to compete with established exchanges such as BitMEX and Deribit which have similar non-expiry futures products.
While there are many similarities between the exchanges, there are some unique features that Bybit have included that could make them attractive. We will touch on these features when we cover their trading technology.
The exchange is open to most traders around the world and the website has been translated into English, Simplified and Traditional Chinese, Korean, Japanese and recently Russian. However, there are some jurisdictions that they do not operate in and these include the likes of the USA, Syria, and the Canadian province of Quebec.
This is one of the most important questions that any exchange user will have. This is especially true when it comes to a new exchange with no established security track record to turn to.
As such, when we look into the safety of an exchange, we are interested in their security policies as it pertains to their coin management, user security tools and of course risk management.
To counter the threat posed by hackers, Bybit operates a secure cold storage solution. This means that they store the bulk of their crypto reserves, and all of the clients’ funds, in offline wallets that are stored in a secure “air-gapped” location.
There is only a small portion of their own coins that are kept in their “hot wallets” in order to service the needs of traders when it comes to withdrawals. Moreover, if they ever need to move funds from cold storage, they need to use a multi-signature address scheme.
Multi-signature means that the exchange will need more than one key in order to sign a transaction from one wallet to another. This prevents the risk posed by having a single individual manage all the funds on the exchange.
In order to prevent the risk posed by online snoops and phishing attacks, the Bybit website has full SSL encryption. This means that all passwords and address information that you send them will be encrypted.
This is also helpful in order to spot a phishing site. If you are on a website that looks like it could be that of Bybit but it does not have a secure padlock in the browser, it is an immediate indication that you are on a phishing site and you should leave immediately.
In order to manage the risk posed by shortfalls in futures contract settlement, Bybit operates what they call their “insurance fund”.
Essentially, this fund will be used in the case that a trader gets liquidated at level that is below their “bankruptcy price”. The latter is the price at which the trader’s initial margin has been completely depleted.
Without the fund there would be a shortfall whereby the counterparty to the trade would not be made whole. It is essentially an insurance policy that will protect traders in the case that Bybit is not able to liquidate the position at bankruptcy price or better.
These funds are replenished with the initial margin that liquidated traders have at the outset of their trade. The difference between the price at which the trader is liquidated and the bankruptcy price is how much will be sent to, or taken from, the insurance fund.
Given that Bybit is a leveraged exchange, it means that they allow crypto margin trades. Traders will only have put up a small percentage of the initial position as collateral for their trades.
This means that if you have a leverage of 100x you will be required to put up a margin of 1% of the initial notional amount of the trade. So, if the notional on a 10BTC contract is $36,000, you will have to put up $360 in the initial margin.
What is surprising about the perpetual contracts on Bybit is their size. Each contract is only worth 1USD which is much smaller than the contracts on other exchanges. Below is all the other specifics of their BTCUSD contract.
They have pretty much the same terms on their ETHUSD contracts and you can find more information about that here. This is different from other exchanges such as BitMEX which, contrary to Bybit, does not offer a 100x leverage product for ETH yet.
Bybit also offers futures contracts on Ripple (XRP) and EOS. However, these contracts have lower leverage levels with max leverage of 25x. This is actually quite interesting as we have not seen EOS futures contracts at other exchanges. This could give Bybit a competitive advantage.
While Bybit does offer 100x leverage on their contracts, this is not constant. If you are a large trader and are entering sizable positions then they will bring down the leverage that you can achieve on your contract.
This protects the exchange from the risk posed by large positions. Below is the table of the BTCUSD risk limits. You can find the ETHUSD, EOSUSD and XRPUSD risk limits on this page.
As you can see, the maintenance margin is constant at 0.5% for all contract sizes. However, for larger positions, they will increase the minimum initial margin requirement such that there is a much greater shortfall between the liquidation level and the bankruptcy level.
|Position Value||Maintenance Margin||Initial Margin||Max Leverage|
Liquidation is what happens when you have nearly depleted your initial margin and the mark price hits the “liquidation price”. In this instance, the trader will be liquidated with the rest of their margin, if any, being sent the Bybit insurance fund.
While there are many traders who may be upset by a liquidation, it is an important risk management tool in a futures exchange. However, Bybit has a number of tools that will help traders avoid the risk of liquidation. These include the following:
Trading fees are an important criteria for us because of obvious reasons. This is especially true when it comes to a futures exchange where you are paying fees on positions that are much larger than your margin.
Bybit operates what is called a “maker-taker” fee model. This means that they will charge traders a fee if they take liquidity off their books and they will give them a rebate if they provide liquidity to the exchange.
Below are the fees that you will pay for the futures contracts on the exchange. They are the same as BitMEX for BTC but slightly above for ETH (as they propose higher leverage for it) and are below other exchanges such as Huobi.
The other fees that you will see when you open the trade is the funding rate. This is analogous to an “overnight” rate and it is a financing charge. Given that margin trading is based on “borrowing” positions, you will either pay a financing charge or be receiving it. However, on the contrary of the transaction fees, these fees are directly exchanged between traders and not Bybit.
The funding rate is determined by market conditions and interest rates. This means that it is not fixed and will vary on a daily basis. You will be able to see the funding rate that will apply under the position details when you open your trade.
In terms of deposit/withdrawal fees, Bybit does not charge you anything on this. However, when you are withdrawing your coins you may incur a miner or “network” fee due to the blockchain mining. This is usually quite small though.
Finally, you have a relatively small $5 fee that you will have to pay on any Asset exchange orders for exchanging physical crypto at spot. We explain that below.
|Contract||Maker Rebate||Taker Fees||Funding Rate||Funding Rate Interval|
|BTCUSD||-0.0250%||0.0750%||-0.0447%||every 8 hours|
|ETHUSD||-0.0250%||0.0750%||-0.0447%||every 8 hours|
|EOSUSD||-0.0250%||0.0750%||0.0100%||every 8 hours|
|XRPUSD||-0.0250%||0.0750%||0.0100%||every 8 hours|
|BTCUSDT||-0.0250%||0.0750%||0.0100%||every 8 hours|
If you have decided that you would like to give Bybit a go then you will have to create an account. In order to do this, they will require either an email or phone number, and a password. If you have been given a referral code then you can use this (more on this below).
Once you have registered, Bybit will send you a confirmation code that you will need to use to confirm your email/phone number. This is only valid for 5 minutes so make sure that you do it right after creating the account.
Once you have confirmed your account and logged back in then you could be offered a deposit bonus. These are a great way to augment your trading funds initially. We give you all these details further below.
ByBit is a crypto-only exchange. This means that you cannot fund your account in fiat currency. While this may be annoying for some, you can easily convert your fiat currency into Bitcoin on a number of exchanges such as Bitstamp or Kraken.
In order to deposit crypto, you will need to generate a wallet address and initiate a transaction into the wallet. You can do this by heading over to your “Assets” section in the header. This will present your wallet balances where you will select “deposit” and it will bring up the BTC / ETH address.
Once you have the address, you can initiate the transaction. It will not be instantaneous as the transaction still has to be propagated through the network and confirmed by the Miners.
Withdrawals are just as easy…
You will hit the withdrawal button on the applicable asset. It will ask for your wallet address as well as confirm the transaction through 2FA. You will also be given information on the miner fee that will be applied to the transaction.
Bybit processes withdrawal 3 times a day at 0800, 1600, 2400 (all in UTC time). There are withdrawal limits that are set on the accounts although these are not too restrictive. Below are the min/max limits:
In order to make sure that they always have funds available on their hot wallet, Bybit also has limits on daily withdrawals in total from the exchange. These are set to 100BTC and 10,000ETH. If this limit is reached, you will have to wait for Bybit to replenish it from their cold wallet.
This is a new feature that was recently added to Bybit which basically allows traders to exchange their current pyshical crypto holdings in the spot market.
Essentially, traders currently have four different cryptocurrencies that they are allowed to trade. Asset Exchange will allow traders to take advantage of quick price changes in the market to exchange one coin for another.
When they are conducting a Asset Swap, they are not doing so directly with Bybit or with the other traders on an “order book”. Their order is essentially getting routed out to other spot crypto exchanges to be executed.
This will ensure fairness as they will be getting the best market price that Bybit can garner. There are limits that apply to the Asset Swap feature which you can find on their websit.
One of the most important things for the margin trader is to have an effective trading platform with advanced technology. This is especially true when you are trading with a great degree of leverage.
So, how does Bybit stack up?
The trading platform seems to be relatively well laid out and intuitive. At the top, you can toggle between your wallets and account management. You can also switch between the BTC and ETH futures markets.
Looking at the standard interface, you have the chart and market depth on the left (you can toggle between). Then in the middle, you have the order book and the last trades. On the right, you have the order forms as well as the contract details.
Scrolling down from the main interface you have other important trading information. This includes things such as the current market activity and your assets.
Something that we really liked about their interface is that it is customizable and modular. You can detach some of the modules, resize them, and move them around such that they are in your chosen position.
For those seasoned traders among you, you will have noticed that Bybit uses tradingview charting technology. This third-party charting package is well known in the industry for having the most functionality and features.
With tradingview charts, the budding technical analysts among you can easily lay your studies and follow the important trendlines. It is also in use on a number of other platforms so it is relatively easy for you to adapt if you do move somewhere else.
You will also notice that in your current position/order bar, you have the “ADL ranking” indicator. This will show you where you currently are positioned for potential deleveraging in the case that the ADL is triggered. As mentioned above, this is done to manage risk.
Something that Bybit appears to be quite proud of is their order matching engine. They claim that this trading engine is able to execute a total of 100,000 transactions per second per contract. So for every new asset, they will add, their matching engine will have a dedicated 100,000 transactions per second for that asset only.
Why does this matter?
Well, faster order execution means that there the risk of slippage and trading errors is greatly reduced. Moreover, with an asset that moves as quickly as bitcoin, it is really important to be able to match both sides of the order book almost instantaneously.
Bybit appears to have pretty advanced order functionality on the platform. This is great as it allows you to not only customise your entry levels but also allows you to manage your risk on the exit levels.
When you are placing your order, you will see the following order form. At the top of the form you can switch between the order types. Below that you adjust the leverage, price and quantity. There is also information on the contract specifics.
There are three order types that you can place on the Bybit platform. These are outlined below:
As mentioned, with the Limit order and the Conditional limit order, the order will have a certain order life. This is for how long the order will remain open until it is “killed”. There are three order life options at Bybit:
On top of all these orders, you also have some optionality around how these orders are executed. For example, with your Limit and Conditional orders, you can set them as a “Post Only”. This will ensure that when the order it will be done as a “market maker” and you will receive the maker fee.
On top of this, you have the option of making your limit order a “Reduce Only” order. This basically means that the order will only execute if it was going to reduce your position. If the order were to increase the position, it would be amended down or cancelled.
You also have a similar order parameter on the Conditional order. This is called “Close on Trigger” and it can be used in conjunction with your conditional stop losses. It will ensure your stops reduce your position and don’t increase it.
One more handy tool that you may want to check out is their position calculator. You may have seen similar tools at other exchanges like BitMEX et al.
This let’s you calculate your your Profit / Loss and ROE on target levels. It can also be used to determine your liquidation levels.
These are actually some pretty neat sweeteners that Bybit has thrown into the mix.
Essentially, there is a number of opportunities for new users to earn some free BTC to trade with. For example, if your first deposit on the platform is over 0.05BTC then you will get an added $5. If it is over 0.5BTC then they will throw you $50. If you deposit more than 1BTC in total you will get an additional $20.
There is also the opportunity for you to do simple tasks to earn a little more BTC. For example, if you merely register and join their social media channels then you will earn $5. Simply use their Take Profit and Stop Loss orders and you bag another $5. Trade for more than 10 days and you earn another $5. Heck, even taking a short customer survey can get you $5.
These additional funds could be a great way for you to augment your account balance. Also, if you were already planning on joining Bybit and trading there, these can be viewed as free trading funds.
Of course, there are “house rules” that come with this bonus. For example, you cannot withdraw these funds and they can only be used as a margin in your account. Moreover, when you withdraw these profits you forfeit your bonus.
If you have been using Bybit and have been relatively impressed with the product then you can always refer others to the platform.
There are two ways in which you can do this. Perhaps the easiest to start is through the referral program. For each referred user you send which deposits 0.2BTC with Bybit, you will get a $10 trading bonus.
If you want to take part in the referral program then you will need to get your code. You can either do this as a unique code that your referrals will use on signup or you can give them your referral link. You can share this link online or on your social media channels.
This can be relatively attractive if you can refer friends making a small amount of one time deposits but if you are looking to refer many more traders who usually do large trading volumes then you are perhaps better suited to signup for the Bybit affiliate program.
This will reward you with a percentage of trading profits that are generated by your traders. This is set at up to 30% of the trading commission that your referrals generate. This is more than the 20% commission that they give at BitMEX.
Moreover, this affiliate structure has different tiers to it. Not only will you get 30% of the commissions that your direct referral generates but you will also get 10% on their affiliate commissions.
You cannot take part in both the referral program and the affiliate program so you have to choose wisely among the two.
One more thing that we found really quite interesting about the Bybit exchange is their trading competitions. These are held on an ad-hoc basis and they allow traders to go head to head.
A number of these have already been held this year but some of the most exciting that we have seen are there “are you a master” trading competition. This ran from April to May and Bybit was giving away up to $6,200 in BTC to their traders.
Another really interesting competition that was run in August of 2019 was their EOS global trading competition. This involved several teams battling it out for up to $60k in prizes. Team captains were chosen and they could build a team of between 10 – 200 members.
Of course, Bybit is not just holding these competitions to be charitable. These competitions encourage trading volume on their platform which gets them fees. So you should take that into account when funding to trade on these.
We have found Bybit to be user friendly exchange with strong technology, reasonable fees and a relatively intuitive user interface. We are also glad to see that they have also developed an insurance fund to manage market risk.
They are well positioned to offer an alternative to the status quo in the crypto derivatives market. In fact, the order book liquidity on Bybit has recently exceeded that of Deribit.
While there were things that we thought warranted improvement, these are relatively easy to implement. The exchange is still new and there is no doubt many improvements are in their pipeline.
So, should you use Bybit?
We encourage you to do your own research but on the face of it, Bybit appears to be an attractive exchange that ticks most of our boxes.