MEXC cryptocurrency derivatives

MEXC platform

MEXC derivatives trading platform is a cryptocurrency exchange with the possibility of spot, margin and futures trading. The exchange has its own MX token. MEXC cryptocurrency derivatives trading platform was founded in 2018 and is very popular not only in Asia, but also in other countries. MEXC Global serves over 6 million users in over 70 countries. The MEXC platform aims to be a platform for new traders and experienced investors moving forward in their financial journey.

MEXC crypto derivatives trading platform is present on different continents, receiving key licenses and verification in countries such as Canada, Australia, Estonia and the USA. MEXC Global also offers localized language support for international investors, making trading convenient for all users. 

The MEXC exchange is a high-performance trading engine developed by banking industry experts and capable of 1.4 million transactions per second for enhanced performance. 

User security is a top priority for MEXC Global, which is why the exchange servers are hosted independently in multiple countries, ensuring optimal data integrity and security.

Commissions 

The commission for MEXC crypto derivatives trading is the same for all traders. Its size is 0.2% per trade. This fee applies regardless of the trading volume or other trading performance of the trader. There are also withdrawal fees on the platform. Deposits and withdrawals are made only with cryptocurrencies, and each type of digital asset has its own commissions and limits.

Derivatives on MEXC 

Access to the contract trading section is available only to verified users. MEXC cryptocurrency derivatives in the Philippines en México are represented by futures and ETFs. Before starting MEXC derivatives trading, you need to transfer assets from a spot account to a futures account.

Crypto futures 

A future is a contract that guarantees the purchase of a fixed amount of cryptocurrency at a specified time and at a certain price.

Previously, futures were used mainly to defer payment for the delivery of goods, which guaranteed the parties stable terms of the transaction.

Now such contracts are used for:

• Trading (speculation on the future price of an asset without actually owning it).
• Risk hedging (selling a futures for the total value of the portfolio reduces the risk of a possible drawdown).

The two main types of futures are:

• Deliverable. It is expected that the asset will be transferred to the buyer on the agreed date. For example, if the futures was for 5 ETH, then the seller will send the ethereum, and the buyer will pay the prescribed amount.
• Estimated. This option involves only paying the difference between the market and contract price of the asset. The transaction object itself is not transferred.

Separately, it is worth mentioning contracts with leverage. Leverage allows you to increase the volume of the transaction and profit in case of correctly predicted trends. But such futures carry increased risks, since in case of failure there is a danger of losing the entire deposit at once.

Expiration 

The exchange is responsible for compliance with the terms of the contract. When the date specified in the agreement comes, two things happen:

• Futures is withdrawn from trading.
• The exchange automatically fulfills the agreements specified in the agreement. This process is called expiration.

For deliverable futures, the variation margin is written off or accrued on the last day. The next day, a transaction for the sale or purchase of cryptocurrency in the volume of the lot will be automatically concluded.

In the case of settled futures, the exchange calculates the result of the transaction, after which the financial difference is accrued or debited from the account. Additional transactions are not carried out.

Hedging trades with futures 

Every cryptocurrency trader periodically has a feeling that there will be a short drawdown ahead, although the general trend is positive. At the same time, there is no desire to change existing coins for stablecoins, there is no desire to leave the staking/farming pool or it is simply unprofitable. In this case, hedging with the help of futures will help reduce the risk of loss.

To do this, open a short position in such a way that the size of the total is equal to the size of the original position. In case of liquidation of the position, the possible losses must be less than or equal to the long profit.

For example, a trader has blocked Ethereum in pools, but fears that the asset will start to become cheaper. For insurance, he opens a futures contract in the opposite direction from the main position. Now, if Ethereum suddenly sinks by 10%, the trader will receive a profit of the same amount from the short position without taking into account the commission. After that, it will be enough to close the short one with income fixation and continue staking/farming on the long one. The dangerous stage was passed with minimal losses.

Working with leverage

Leverage is borrowed funds that increase the volume of selling or buying cryptocurrency, increasing the potential loss or profit. 

Exchanges offer different options - from 1.2x to 125x and more. Since with such loans, the market movement in the wrong direction can instantly eat up the entire deposit, the 10% rule should be used.

• Any position with leverage should be entered no more than 10% of the balance. Given the high volatility of the cryptocurrency market, this rule becomes even more stringent.
• Open positions with a volume of no more than 1% of the total balance.

With this approach, 99% of the funds are on the account as insurance against unpredictable trend changes.

It is important to understand that leveraged futures trading is very similar to gambling. And here and there, the majority of participants have the same goal - to tickle their nerves and not lose. Winning - how lucky. But in the auction there are more chances, because the confrontation is not with a deliberately winning system, but with other similar traders.

How to invest in cryptocurrency through securities? 

There are crypto-currency funds and exchange-traded notes whose price depends on the behavior of the monitored asset. This means that you can invest in the most popular cryptocurrencies through the familiar exchange infrastructure.

Cryptocurrencies are risky, but they can provide great returns. Also, their price is not very strongly correlated with the stock and bond markets, because this is, in fact, a different asset class. Therefore, some investors are ready to allocate part of the portfolio to cryptocurrencies.

You can get cryptocurrency, for example, through mining or by buying it on crypto exchanges and exchangers. These are the main ways. However, they are not suitable for everyone, for example, because of fears of encountering fraud or unwillingness to understand new services and programs.

At the same time, there are cryptocurrency funds and exchange notes, the price of which depends on the behavior of the monitored asset. This means that you can invest in the most popular cryptocurrencies through the familiar exchange infrastructure.

Exchange-traded funds (ETF) 

ETFs are familiar to many investors. They belong to open-ended funds and are able to constantly accept new money by acquiring additional assets and issuing new shares.

The BTC-ETF (Exchange Traded Fund) launched in the US on October 19, 2021, marking a watershed moment for the crypto industry.

What is a Crypto ETF? 

A crypto ETF is an exchange-traded fund that tracks Bitcoin prices. It can be bought or sold during the day, just like stocks.

Crypto ETFs and conventional ETFs share the same structure, making them tradable on an exchange. ETFs are investment funds that mimic the price of an underlying asset or index, similar to the well-known S&P 500 index. stocks, bonds and alternative investments.

Investors own shares in the ETF itself, not the underlying assets in which the fund invests.

ETFs are traded on stock exchanges: they are bought and sold like shares, subject to commissions and other fees associated with them. This is where they differ from traditional mutual funds, which only trade once a day. Investors prefer ETFs because they provide access to investments in a basket of securities or other investment products that they would not normally have access to. ETFs give investors the opportunity for diversification and liquid investment.

Requests for the formation of crypto-ETFs have been repeatedly rejected by the US Securities and Exchange Commission (SEC), which is designed to protect investors. The first bitcoin ETF application came from Cameron and Tyler Winklevoss in July 2013 and was officially rejected four years later.

Others have also submitted ETF proposals but have been turned down or withdrawn by the companies themselves. This happened with SolidX, Grayscale, ProShares, Direxion and GraniteShares. Moreover, some applications are still under consideration - these are ETF proposals from WisdomTree, VanEck, Valkyrie, Fidelity and many others.

At the same time, Canadian regulators approved the world's first Bitcoin ETF in February 2021, which trades under the ticker symbol BTCC, while the Evolve Bitcoin ETF trades under the symbol EBIT.

In early August 2021, SEC Chairman Gary Gensler made it clear that he was not opposed to futures ETFs as long as they follow the strict rules that apply to other mutual funds. Issuers must structure ETFs in accordance with the Investment Company Act of 1940, which protects investors from illegal activities. ETF issuers immediately began to apply.

How does ETF for cryptocurrencies work? 

Crypto ETFs are exchange-traded funds that follow the price of bitcoin, giving investors access to indirect investments in this cryptocurrency. 

The price of each ETF changes according to the price of Bitcoin. For ETFs, the net asset value is calculated and reflects the value of the entire fund.

However, since ETFs are freely traded on an exchange, their prices may actually differ from the net asset value, which in this case is the value of bitcoin. Trading above its net asset value means the ETF is trading at a premium, while trading below means the ETF is trading at a discount.

Why Buy Crypto ETFs? 

• Convenience

The advantage of a Bitcoin ETF is that it provides traditional investors with access to Bitcoin holdings without the need to create an account on a cryptocurrency exchange. Some traditional investors have yet to enter the cryptocurrency market, although they may already have brokerage accounts with financial institutions that trade securities. It will be more convenient for these investors to continue using the same brokerage account for cryptocurrency investments.

Some investors may find it unpleasant or unaccustomed to working with cryptocurrencies in the “classic” way, so they invest in crypto ETFs. Moreover, personal storage of cryptocurrency causes additional difficulties, which ETF allows you to get rid of. In other words, investing in crypto ETFs is easier than buying coins.

• Regulation

For corporate investors, such as pension funds or financial managers, there are special powers and rules that prohibit them from directly investing in cryptocurrencies. However, they may be allowed to invest in an SEC-approved instrument such as a Bitcoin ETF. 

• Diversify

Crypto-ETF invests in an asset not listed on classical exchanges, providing a previously unavailable portfolio diversification option. This strategy helps investors reduce the risks associated with investing in only one or a few assets. With a crypto ETF, an investor can easily add BTC to their portfolio without even delving into the basic concepts of the crypto world.

• Liquidity

The opportunity to invest in crypto-related assets may bring completely new groups of investors (for example, corporate ones) to the crypto-currency market. This increases liquidity as more participants join the cryptocurrency markets by buying and selling bitcoin. The presence of ETFs with underlying investments in bitcoin creates another platform for further increasing the depth of order books.

• Possibility for shorts

Some institutional investors who previously did not have access to crypto futures contracts can now effectively “short” crypto using ETFs. This provides investors with yet another tool for trading cryptocurrencies.

• Fear

The cryptocurrency market has only been around for ten years, so it attracts sensational news in the media and a lot of scammers. However, the scam not only keeps investors at bay, but also teaches people how to properly store cryptocurrencies.

Without this knowledge, the user can make serious mistakes leading to losses. According to Markets Insider, about 20% of the existing 18.5 million bitcoins are lost or stored in inaccessible wallets. Anyone who is very worried about negative news and worries about possible losses if their cryptocurrency is stored incorrectly may feel a little more comfortable investing in ETFs, even though this does not eliminate all risks at all. After all, the ETF directly invests in bitcoin.

Fear of the unknown is sometimes enough to keep people from ever touching something new, so ETFs can seem like a tried and true vehicle for traditional investors.

Alternatives to MEXC Cryptocurrency Derivatives 

In addition to trading MEXC derivatives in the Philippines, there are other opportunities to make money.

MEXC investment programs 

MEXC offers traders two types of investment instruments. In particular, users can receive additional income for simply storing cryptocurrencies in their wallet (Holding). Staking is also provided on the platform. Unlike Holding, here you need to freeze coins for a certain period before the interest rate is calculated.

Holding from MEXC – favorable conditions for 9 types of cryptocurrencies.

The Holding from MEXC investment program provides for the receipt of interest for storing cryptocurrencies or tokens in a wallet. At the same time, traders can dispose of these assets without restrictions. The interest rate is charged on the balance of assets every day during which this or that coin or token is kept on the account. The program covers 9 types of digital assets:

• Helmetinsure (HELMET)
• PancakeSwap (CAKE)
• Beacon ETH (BETH)
• Kusama (KSM)
• MDX Token (MDX)
• Polkadot (DOT)
• Dash (DASH)
• ChainX (PCX)
• Tether USD (USDT)

The USDT Holding program is developed by MEXC for clients who hold USDT in a crypto exchange wallet. The yield on MEXC investment programs varies depending on the chosen instrument. For example, for HELMET it is 8.88% per annum, for USDT - 1.88%.

Staking from MEXC - a special offer for investors 

MEXC also offers customers additional income through staking. In this case, users need to freeze a certain number of coins for a certain period. During this period, interest is accrued on stored digital assets. Assets cannot be disposed of until the expiration of the staking period. As soon as the freeze period ends, the platform pays the amount + interest.

Staking on MEXC can be done with the following types of digital assets:

• Bitcoin (BTC)
• Ethereum (ETH)
• TetherUSD (USDT)
• EOS (EOS)
• Polkadot (DOT)
• Kusama (KSM)

The interest rate for each type of digital asset is also different. For example, for BTC and ETH it is 4.00% per annum, for USDT it is 6.88% per annum. The freezing period is also different. For example, for BTC the minimum freeze period is 15 days, for ETH it is 7 days.

Affiliate program from MEXC 

Classic affiliate program. Cryptocurrency exchange clients can promote services through a referral program. To do this, you can get a referral link in your account.

The company accrues remuneration for registration and replenishment of the account by a partner. MEXC pays customers up to 80% of the partner's deposit amount.

Start trading MEXC crypto derivatives in the Philippines and you will succeed.