OKEx, the second-largest cryptocurrency exchange by traded volume, has recently launched a new product called Perpetual Swap, which is a virtual derivative based on BTC/USD price speculation.
The mechanism behind the new derivative product is similar to the one of futures contracts. The major difference, however, is that the perpetual swap does not have daily and expiry settlements.
The value of each swap is $100 worth of Bitcoin. According to Cointelegraph the “derivative product allows users to perform perpetual swaps, futures contract, and spot trade with margin and leverage simultaneously”.
Not only do traders will have the opportunity to hold their positions indefinitely, but will also be able to enjoy a great range of leverage, as the swaps allow leverage of anywhere between 1x and 100x.
The 100x allowed leverage can actually work to reduce costs, as most capital markets allow for up to 10x leverage. In addition, the perpetual swaps allow traders to adjust their leverage and positions according to their risk appetite. The feature is called “tiered maintenance margin ratio”.
Nasdaq will also be developing a bitcoin derivative product in the beginning of 2019. The market for bitcoin derivative products is slowly, but surely growing. The Chicago Mercantile Exchange (CME) reported that the average Bitcoin futures daily trading volume has increased by more than 40 percent in the third quarter of 2018, as compared to the second one.