BitMEX launches options trading, aims to capture significant market share from Deribit

Crypto derivatives exchange BitMEX has launched options trading, co-developed with PowerTrade, a crypto options platform with backers including Ascend Ventures, Pantera Capital and Ledger Prime.

Well known for its 100x leverage perpetual swaps, recently raised to 250x for its bitcoin perpetual swap ahead of the halving, BitMEX wants to capture significant market share in the niche from rivals, including the dominant Deribit platform, in what it describes as a “crypto OG bullfight,” in a statement shared with The Block.

In terms of specifics, BitMEX CEO Stephan Lutz told The Block it was aiming to capture at least $500 million in trading volume within three months, with options trading offered in all regions where BitMEX is currently available.

Deribit accounted for 70% ($35.7 billion) of the $51.1 billion worth of trading volume for bitcoin options in April and has led the market since 2020. Large crypto exchanges such as OKX and Binance have also tried to challenge Deribit for market share but with limited success, generating 16% ($8.4 billion) and 9% ($4.8 billion), respectively, of the trading volume last month, according to The Block’s data dashboard .

The BitMEX options platform offers a “full suite” of institutional grade options for assets, including bitcoin, ether, XRP, BNB, solana and dogecoin, with plans to expand on this in the near future, the firm said.

“Crypto Options are a great product for derivatives traders especially when the market trajectory is going sideways,” Lutz told The Block. “As a leading derivatives exchange, we want to empower BitMEX users with the optimal tools to maximize their potential and trading strategies, whether it’s hedging risks, positioning or capitalizing on the recent surge in implied volatility.”

“The new BitMEX options platform merges PowerTrade’s trader-centric options solution with BitMEX’s deep liquidity and unparalleled reliability, empowering traders with seamless access to the most performant financial products,” PowerTrade CEO Mario Gomez Lozada added.

Capturing crypto options market share

The firm’s initial strategy centers around incentivizing users with zero fees on options trading throughout May, alongside a $20 onboarding bonus for the first 1,000 new options traders, rewards based on trading volume and referred trading volume and monthly trading competitions.

After the zero-fee promotion period, BitMEX’s options fee structure would mirror its existing spot trading fee structure, Lutz confirmed.

The exchange will also provide educational resources for users new to options trading or the BitMEX platform, Lutz added, including basic explainers, strategy examples and a step-by-step video guide.

Integrated into BitMEX’s existing system, the firm argues it can also capture market share by offering a user-friendly and more secure options trading interface via an orderbook and Request-for-Quote (RFQ) with reduced counterparty risk. RFQ enables traders to get electronic quotes and execution on large single-leg (e.g. buying a call) or multi-leg (e.g. buying a call and selling a put simultaneously) options strategies with no minimum requirements.

RELATED INDICES

“In comparison to other options platforms which typically do not offer multi-leg strategies and have a minimum block size of 25 BTC or 250 ETH, BitMEX options traders enjoy fast quotes at tight pricing — providing a more capital-efficient alternative for our trading community to be successful,” Lutz told The Block.

In what BitMEX described as a further distinction from its competitors, the exchange explained options traders can deposit multiple assets as collateral, including bitcoin, ether and USDT, with pricing and settling of options in USDC.

“Unlike other options platforms that primarily use BTC or ETH for settlement and would require additional fees for conversion, BitMEX options presents a more flexible and user-friendly product to the current market,” Lutz said.

Using multi-asset margining at market rates avoids friction from asset conversions and collateral management, improving user experience and capital efficiency by reducing total margin requirement for positions and avoiding moving capital to another platform, according to the firm. “This is very different to the current leading options exchanges where traders must margin Bitcoin options with Bitcoin, Ethereum options with Ethereum and so on,” Lutz added.

“BitMEX has once again seen a notable growth in trading volumes across our prime derivatives contracts on Bitcoin, Ethereum, and many altcoins. When we first developed BitMEX Options trading, it was our priority to make it easy to use for perpetual swap traders,” Lutz said in the statement. 

“By integrating traditional trading interface features like live charts and multi-asset margining and leveraging on the battle-proven BitMEX infrastructure, we are confident to provide a better experience than the competition — especially for traders that are new to options,” Lutz added. “As options trading’s popularity grows stronger every day, BitMEX is now able to offer them a safer, more capital-efficient alternative than the foremost player in the market, Deribit.”

BitMEX’s options platform is also supported by digital asset market makers iGreeks and DWF Labs, charged with ensuring sufficient liquidity and low slippage for traders. “BitMEX is working exclusively with trusted, external market makers and has advocated for this as an industry best practice before,” Lutz said.

“This exciting collaboration meets the needs of the modern traders by enhancing our market-making capabilities with reliable liquidity on BitMEX options platform,” iGreeks founder and CEO Marcus Yuen said.

“BitMEX’s partnership with PowerTrade is set to establish a new benchmark in the options trading market. Leveraging our profound understanding of market dynamics, we are committed to effectively providing healthy liquidity, ultimately optimizing a more liquid and robust trading environment,” DWF Labs CEO Andrei Grachev added.

Doubling down on derivatives and the future of crypto options

BitMEX has doubled down on the crypto derivatives market over the past year, including the addition of pre-launch listings and the launch of prediction markets in September as a “great tool to level up your trading game” in a bear market, Lutz said at the time.

Under former CEO Alexander Höptner, BitMEX had previously pursued a strategy it billed as “beyond derivatives,” which involved branching into spot trading and several other new business areas. But after several rounds of restructuring and Höptner’s departure in October 2022 , the firm has been getting back to its roots.

Lutz told The Block that the crypto options market has experienced significant growth and maturation in recent years, with demand from professional and institutional traders “soaring amid the current bullish environment.” Going forward, despite Deribit’s current dominance, the BitMEX CEO believes competition will intensify, which is why the exchange wanted to expand its derivatives portfolio and “get ahead of the curve” by launching its own options trading.