Exchanges fight every single day for the position of crypto’s best margin trading platform. The battle is eternal and positions fluctuate almost constantly. Nevertheless, there are still 3 OG companies that will forever stay relevant.
For some people, spot trading Bitcoin and other cryptocurrencies simply isn't enough. After all, when you're sure of your position, the temptation to bet bigger becomes increasingly alluring.
Trading cryptocurrencies like Bitcoin with leverage allows experienced traders to play with greater position size. Doing so increases the payoff when the market agrees with you but can be punishing when it doesn't.
That's why you want to use the best crypto margin trading platforms in existence today.
They have all the tools the discerning crypto trader needs to implement the risk-mitigating strategies crucial to keeping your account well in the money.
Without further ado, here are the best exchanges for margin trading Bitcoin and other leading cryptocurrencies.
Binance hardly needs any introduction by now. Known for being the world's largest crypto exchange, Binance made waves by becoming the first exchange to hire an ex-US senator as a regulatory liaison.
So, why choose Binance to carry out your leveraged crypto trades over other exchanges? The simple answer is liquidity. As the leader in crypto exchange platforms, Binance is a black hole for liquidity, meaning your position size will never outstrip Binance markets.
Using Binance, you can trade with up to 125x leverage, giving you massive range and trading power. However, where Binance margin trading really shines is in the variety of quote assets offered.
Quote assets refer to the types of assets you can deposit in your account as collateral (margin). On Binance, two major markets are offered.
Binance calls its stablecoin margin market USDⓈ-M Futures, which is just a fancy way of saying this particular market uses stablecoins as the basis of your leveraged trade.
Before trading, the exchange requires you to input your desired leverage, after which you're given that particular trade's margin requirements. For example, a 50x BTCUSD perpetual futures contract has an initial margin rate of 2%.
Binance's perpetual futures market is set up so that the higher your leverage amount, the less notional value you can trade with. Notional value is the size (denominated in USD) of the underlying asset value.
In other words, more leverage = less initial margin, but less of the underlying asset available to you, whereas less leverage = more initial margin, but more of the underlying asset available.
The stablecoin-based margin trading structure built by Binance is made to favor traders liquidating their positions before the exchange does so automatically. This is accomplished via a maintenance margin rate that is always less than 50% of the initial margin.
To view the fee schedule and further specs related to the stablecoin perpetual futures market on Binance, head over to this FAQ page.
If you're crypto rich but rather short on fiat, Binance gives you another option for trading perpetual futures.
Called Coin-Margined Futures Contracts, these futures contracts let you fund your account with crypto like BTC, ETH, and popular DeFi tokens and also denominates your PnL in crypto.
The underlying asset in the contract is a cryptocurrency, such as BTC, while the quote asset is normally USD. As such, you'll find BTCUSD is a fairly standard format for margin trading contracts.
Apart from the difference between funding your margin in cryptocurrency versus stablecoins, margin trading with tokens works exactly like doing so with USDT. One thing to note is that tokens are a much more volatile margin currency, which will require greater maintenance on your part.
Binance offers a smorgasbord of cryptocurrencies available for leveraged trading. Everything you can dream of is here, from DeFi and NFT tokens to coveted layer-one tokens like ETH, DOT, ADA, SOL, ATOM, and ALGO.
Leveraged tokens are an innovative trading product that emulates the benefits of trading on margin without the risk of liquidation. Whereas traditional margin trading requires you to deposit collateral, leveraged tokens are bought and sold in the same way as spot positions.
The major difference between buying spot and leveraged tokens is the latter exposes you to multiples of price percentage increases (as well as decreases), whereas spot doesn't.
For instance, a leveraged token gains 3% for every 1% gain of the tracked crypto asset. Taking the SUSHI token as an example, if the SUSHI spot price increases by 1%, the SUSHI leveraged token increases by 3%. Moves to the downside are tracked the same; however, there is no margin to worry over, hence no possibility of liquidation.
Another sweet thing about leveraged token trading is the ability to move your tokens off the exchange and onto another exchange or ERC-20 token wallet of your choice. Due to the volatility of leveraged tokens, they don't make great long-term HODL coins, but it sure is nice to have the option anyway.
If you're trading on margin, you need a good assortment of order types to protect your stack.
On that note, Binance has you well covered by offering stop-loss orders, take profit orders, and trailing stop orders.
Find the full breakdown of Binance order types here.
Kraken is one of the few major cryptocurrency exchanges that offer margin trading to US residents. That's already a major draw, especially since Coinbase and Gemini, the other major exchanges serving Americans, don't offer leveraged crypto trading products.
However, Kraken didn't make this list of the best margin trading crypto exchanges by default. As one of the big three US-based crypto exchanges, it offers plenty of liquidity, a highly compliant regulatory framework, on-exchange insurance, and public recognition.
The last part is getting bolstered by Kraken's recent bid to increase its valuation to $10+ billion in light of Coinbase's recent $100 billion valuation.
Margin trading on Kraken doesn't come with the degen 125x leveraged trading available on other exchanges, nor is it as chad as BitMex margin trading circa 2018.
But that is probably a good thing. Leveraged trading on Kraken is for the risk-averse, sensible trader types who don't want or need super high leverage.
Perhaps Kraken is the thinking person’s margin trading platform where an ultra performing trading engine, up to 5x leverage, and a pro trader interface are all the bells and whistles needed.
The Kraken advanced trading engine gives you instant exposure to one of crypto's deepest order books, all while paying the lowest fees for leveraged trading amongst centralized exchanges.
Kraken doesn't have the variety of margin trading instruments that Binance does (leveraged tokens, vanilla options), but it does have a shiny trading fee schedule and coin margin.
In fact, you'll find the lowest fees in the land of crypto margin trading at Kraken — a relative surprise for an exchange that didn't build its reputation on margin.
Margin fees are being charged in the quote currency (i.e., USD, EUR, XBT, USDT) of a given pair when you go long and are charged in the base cryptocurrency (i.e., XBT, ALGO, DOT, ETH) when you go short.
The fee to open a trade is lower when you open in a highly liquid market such as XBT/USD (0.01%), whereas it is slightly higher when opening a trade in a smaller market such as FIL/USD (0.02%).
To maintain your position four hours after opening, Kraken charges a rollover fee that is the same as the opening fee paid for the given pair (i.e., either 0.01% or 0.02%).
Kraken offers a solid selection of cryptocurrencies available for up to 5x leverage trading.
Choose from ALGO, BTC, USDT, USDC, REP, BCH, ADA, LINK, ATOM, DASH, EOS, ETH, ETCC, FIL, LTC, XMR, OMG, DOT, XRP, XLM, XTZ, TRX, ZEC as base currencies.
On the quote currency side, you can open a long position from EUR, USD, CAD, GBP, USDT, XBT (though these quote currencies aren't available for every pair).
On Kraken, you can't max out the 5x leverage on every pair. The reason most likely being that Kraken isolated more volatile/illiquid pairs with lower leverage options and gave liquid pairs the maximum 5x allocation.
Even in markets where you can run the full 5x leverage trade, Kraken disallows you from doing so with every quote currency included. For instance, the XBT leverage market allows for 5x trading from XBT/USD and XBT/EUR, but only includes up to 3x leverage for XBT/GBP and XBT/CAD.
The less established an altcoin is, or the smaller its total market cap and normalized volume, the less leverage you can trade with across its available pairs.
The best feature available on Kraken for leveraged trading is, without a doubt, the ability to deposit collateral in a wide range of cryptocurrencies. You don't have to trade the crypto that matches your deposit — instead, it's used to collateralize the trade you open, even if it's in an entirely different currency.
This means you can deposit ALGO as a collateral currency then use the value of your collateral to long XBT/USD. That gives you some pretty powerful flexibility if you have cryptocurrency on hand already and want to leverage it to trade other pairs.
A conversation about the best crypto margin trading platforms isn't complete without discussing FTX, the newest exchange in town.
Backed by the billions of assets under management at Alameda Research, FTX has taken the crypto world by storm with its ultra-fast leveraged trading engine, low fees, and trader-friendly policies.
The FTX motto is built for traders, by traders — and it's easy to see why that's true. Sam Bankman-Fried, the founder of both Alameda Research and FTX, is a former Wall Street quant trader with deep experience building high-performance trading systems.
Amongst the innovations FTX has pushed forward in a short amount of time, leveraged tokens, the margin-less way to do leveraged crypto trading, are probably the most well-known.
However, FTX perpetual futures are where the exchange really made its name. While other exchanges only offered XBT, ETH, and other major yet limited markets for leveraged trading, FTX was busy adding markets for everything under the sun.
DeFi tokens like AAVE, UNI, SUSHI, COMP, and SNX all had perpetual futures markets shortly after becoming successful, leading to a surge in degen trading activity.
One of the nifty innovations FTX enables is a peer-to-peer borrow and lending market for margin trading.
Let's say you want to borrow 1 BTC to trade on margin. In today's prices, 1 BTC is roughly $58K, so first, you fund your account with that amount. Then, you enable margin trading and borrowing options in your FTX trading account.
Now, when you deposit the USD and borrow the BTC, you'll earn interest on your locked USD (if it's borrowed in turn) and will pay interest on your borrowed BTC for the duration of the loan.
One of the great benefits of this system is FTX allows you to borrow any available asset regardless of the asset you've deposited as margin. As long as you have enough margin on the exchange, you can withdraw whatever assets you want. You can see the full list of borrowable assets here.
Lending for margin trading is nifty, even if you don't want to trade. Just enable your idle assets for lending and denote the least amount of interest you're willing to accept.
FTX spoils traders for choice with an impressive array of margin trading products for going full ape mode.
While some of these products may already be familiar to you, others, like tokenized stocks and volatility products, are quite new. Tokenized stocks track the value of underlying stock assets but make them trade as tokens do, along with the innovations and speed offered up at FTX.
Volatility products, much like leveraged tokens, let you gain exposure to volatility much in the same way margin trading does, but without having to deposit margin and keep track of complicated funding rates.
If you spend time on crypto Twitter, you'll quickly realize just how many of the top crypto traders are shilling FTX. Like the Binance invite links of yesteryear, FTX invites are prevalent nowadays.
The big difference between the old Binance invites, and the current crop of FTX invites is that you can see the trader leaderboard on FTX to verify that the traders shilling the exchange actually trade there.
As it turns out, everyone who shills for FTX also uses the exchange religiously. That's probably got to do with the exchange's fair fees, transparent structure, blazing-fast trading engine, and amazing support desk.
At the end of the day, you probably want to know which of these exchanges is the best for trading crypto on margin. The answer to that comes down to preferences, but here is a quick guide for helping you decide which exchange is right for you.
Each day Shrimpy executes over 200,000 automated trades on behalf of our investor community. And joining them is easy.
After you sign up and connect your first exchange account, you’ll deploy an investment-maximizing strategy in as few as 5-minutes.
Whether you create your own rebalancing strategy or completely custom automation, the ability to walk your own path belongs in the hands of every crypto investor.
Discover 5 popular alternatives to Robinhood and decide which app you should start investing with in 2023.
Dive into automated crypto investing. Learn how it works, its advantages, potential risks, and top platforms for your investment journey.
A crypto robo-advisor is a platform that manages your cryptocurrency portfolio automatically. Here are 5 robo-advisors to use in 2023.