Crypto derivatives exchange Bybit, based in Singapore, announced recently that it has launched spot trading within its platform. As a result, users will now also be able to purchase cryptocurrencies themselves, instead of only buying derivatives contracts.
The difference between spot and derivatives trading
While most cryptocurrency traders are well familiar with spot trading — the act of purchasing cryptocurrencies like Bitcoin, and then transferring them to their wallets, exchanging them for another crypto, or simply selling them in order to make a profit — derivatives trading works differently. Like in traditional finance, it doesn’t involve buying an asset, but rather predicting its future price through price and market analysis, and then betting on which way the price will go.
This allows users to earn a profit even during bear market, when anyone who bought the actual assets would be facing losses, as the asset in question is losing its value. This is a clear advantage that derivatives traders have over spot traders, and it is particularly useful in the crypto industry, where high volatility constantly pushes asset prices up and down. It no longer matters which asset traders are using — only whether or not their price prediction game is on point.
With that said, spot trading has grown a lot this year due to skyrocketing prices. Even though crypto prices have been cut in half back in May of this year, many are still optimistic regarding the second part of the year. This optimism is inspiring a lot of people to invest, rather than to trade, so launching spot trading makes sense, given the fact that a lot of people are now thinking of investing long-term.
Bybit itself has seen a tremendous amount of usage, amounting a trading volume of $33 billion in the last week alone. With the introduction of spot trading, this figure may yet be only the beginning, especially since the platform announced that it will charge no maker fees. As some may know, maker fees are usually charged if the orders are not picked up by buyers/sellers immediately after the order is made. This will give traders an incentive to enter positions and simply wait, rather than fear of losing money due to fees if the demand is not strong enough.
Bybit makes a move to expand its offering
According to the data published by Nomics, Bybit is one of the leading derivatives exchanges in the entire world. It certainly has a trading volume that is right up there with other leading platforms, allowing traders to use futures.
The platform insisted that the decision to launch spot trading did not come due to the drop in derivatives activity, nor the platform’s potential expectations that something like this might happen in the near future. Instead, it stressed that this is simply a part of its long-term strategy.
After all, a lot of platforms aim to serve as many crypto users as possible. This allows them to become a dominant force in the market, provided that its services are beneficial enough for traders and investors. Things like low fees, good prices, ease of use and accessibility, among other things are all details that attract investors and traders to certain platforms. By introducing additional features — in this case, spot trading — the platform will not only keep its existing customers, but also attract new ones thanks to the quality of its service, in combination with these new options.
So, with that in mind, it makes sense for the platform to launch spot trading as a simple addition to its platform, as mentioned, and not an attempt to switch to the type of crypto activity that is the current trend. It noted that its goal is to offer products beyond futures contracts, and to also introduce spot and options trading, cloud mining, information and education content, and more.
As for its new spot trading feature, the platform plans to introduce several trading pairs immediately, which it derived are the most sought after at this time. These include Bitcoin/Tether, Ethereum/Tether, XRP/Tether, and EOS/Tether pairs. Meanwhile, additional pairs will arrive in due time.