ByBit Exchange Guide & Review

Introduction

ByBit is a cryptocurrency trading exchange that was first established in March 2018. Compared to most of its competitors, it’s considered to be quite new, having only been around for a little over two years. 

Despite this, ByBit has experienced exponential growth since first launching and is now by many bitcoin traders considered the premier choice for trading bitcoin derivatives. This is because of things such as order book depth, ease of use, liquidity, stable trading engine, excellent support and more. 

This up-to-date guide and review will look at all the features that make ByBit an excellent choice as a trading exchange for most bitcoin and margin trader.

Creating an Account

In general, creating an account is very simple, but keep in mind you will be required to go through a standard KYC (Know Your Customer) procedure before being able to trade.

If you desire an account with up to $90 start bonus, click our registration button below:

ByBit Bonus & Rewards

After creating an account with our registration link, you will be able to claim up to $90 in bonus rewards. There are other bonuses you will also be able to claim over time as ByBit updates and changes the rewards available. There are also different competitions with rewards from time to time.

Rewards should never be an essential part of any exchange, but I’m sure this is very welcome for users with smaller accounts. This is a simple method to attract new users and to gain market share in a very competitive space. 

Depositing

Once you have created an account, you are ready to deposit some collateral to start trading. As of 2020, the following is possible to deposit: Bitcoin, USDT (tether), Ethereum, XRP and EOS. 

Once you have clicked on “withdraw” you will see your ByBit wallet address. This is the address which you will want to send your collateral to (usually Bitcoin). There are no deposits or withdrawal fees on ByBit, only the standard blockchain fee paid to miners when you send crypto.

Keep in mind some deposit bonuses are depending on size, which you can view on the rewards page. 

Fiat Gateway

Another method to deposit crypto in your account is to use the new Fiat Gateway feature. The ability to purchase crypto (Bitcoin & Ethereum) has very recently been launched on the platform. This will allow users to purchase their desired crypto with a couple of clicks on ByBit. 

By clicking “My Assets” under your profile name, you will be able to find a button called “Buy Crypto” in the asset overview. When you click this button you will immediately be taken to the purchase screen below.

Fortunately for users around the globe, there are currently over 20 different fiat currencies that are supported. As for payment methods, you are free to use any Visa or Mastercard to complete the transaction. 

Keep in mind that as with most crypto credit purchases, you will be charged with a premium to buy with your credit card. If I were to buy at this very moment, I would have a cost premium consisting of transaction fees and perhaps other minor administrative costs of around 4.7%.

This means If I were to buy $50 of Bitcoin, I would buy effectively at $9 800 instead of $9 380 (example). Fortunately, the buy screen is transparent and displays the “Crypto Unit Price (inc. fees),” which allows users to view the exact price they are receiving. 

For any significant buy amount, I will always recommend generally using bank deposits to purchase crypto to avoid unnecessary fees. If this is unavailable or your purchasing reasonably small amounts, using credit cards is perfectly fine. 

Trading

Once you have deposited your desired collateral it is time to start trading. I would recommend trading primarily BTCUSD Perpetual and ETH Perpetual on ByBit. 

The reason for this is these are the greatest in terms of liquidity and order book depth. A volume comparison can be seen above where BTCUSD represents inverse perpetual.

Keep in mind if your account and trading size is on the small side, this will naturally be of less significance. 

ByBit tends to be placed in the top 5 of all exchanges when it comes to 24 hours trading volume and open interest (open positions in USD). From personal experience, this is one of the exchanges where I receive the least amount of slippage when trading. 

What is slippage? If I were to market buy 100 000 contracts for $10 000, and my average price becomes $10 050, that’s 50 dollars in slippage. In other words, it is the difference between the expected price and the price which the trade actually is executed on. In the long run this can be costly and is something we want to reduce as much as possible. 

To avoid slippage, you would want to choose exchanges with decent depth of their order books as attached above. Here you can view how much the price will move if you sell or buy a certain number of contracts at any given time.

Leverage

The exchange does offer leverage up to 100X when trading on the regular USD and not USDT trading pair. However, at this point this is mostly a gimmick, seeing as there are very few profitable trade systems that can take advantage of this successfully. The risk a person wants to carry is entirely up to that person but personally I use between 1x to 5x leverage, and if you are inexperienced, I would always suggest low leverage.

Trading Engine

ByBit boasts of having a trading engine capable of matching orders at a rate of 100 000 transactions per second per contract, in other words 100 000 TPS (transactions per second). This is considered to be quite quick, I’m aware of Binance having similar TPS but other than that most exchanges don’t like to reveal such numbers. 

It is important to note the most critical part of any matching or trade engine is stability. If it has 600 000 TPS and still overloads during critical periods, it’s not very useful for the customer. 

Good news on this front, as ByBit is one of the most stable exchanges during extreme periods of volatility, where their main competitor has frequent overloads. ByBit tends to come out of volatile situations more unscathed than the rest. This is part of the reason why many traders have moved away from BitMEX over to ByBit and other exchanges in hopes of avoiding such painful moments of being unable to close or open trades when they desire it the most. I reached out to BitMEX for information about their trading engine to conduct a comparison, but they were unwilling to disclose that information. 

Security

I’m pleased to see that ByBit has implemented proper security methods to ensure that the funds are safe. This is done by using cold wallets, specifically, hierarchical deterministic cold wallets, which is different regarding how seeds are created but that’s for another article. 

What does this mean? Since ByBit stores the funds offline in cold wallets, hackers will be unable to access the funds if the exchange is compromised, contrary to hot wallets that will become exposed to hackers or breaches. If you read an article about an exchange being hacked and having their funds stolen, it means the funds have been accessible on a hot wallet. 

ByBit is able to only store funds in multi-signature in cold wallets because they don’t do live exchanges between fiat currencies and cryptocurrencies, which removes the need for hot wallets.

The downside with this method is that withdrawal takes slightly longer, but well worth the sacrifice in my humble opinion. 

Overview

Most exchanges have a similar interface in terms of layout and controls, and I think it looks reasonably clean and provides everything you have come to expect from cryptocurrency exchanges. 

The user interface is straightforward and relatively easy to use, although the menu could have been organized better. Despite this, the user interface is easy to get accustomed to and quick to operate. If you click the tab “assets” under your account, you will get an overview of all your account holdings and current positions active on each account.

I like the closed P&L (profits and losses) curve and the asset history as opposed to having only order/trade history. It is nice to keep track of your performance visually, as outliers and drawdown periods stand out much clearer than just a table of numbers.

Mutual Insurance

When you open up the trade interface, you will notice you will be asked about mutual insurance. This is a new ByBit feature that works as a risk management tool for traders. You will have the option to activate this when you open your trade interface, there is also a button for it next to your open position.

So, what does it do? It works as a hedge against market movements that turn out to be unfavourable, in other words creating a loss. If you have bought insurance and the loss occurs within that time-frame that you have purchased insurance for, you will receive a payment from the mutual insurance fund.

You can buy protection for both your long or short positions with mutual insurance. A trader with a long position can purchase long protection to hedge and help offset a potential downside risk.

Similarly, a trader with a short position can buy short protection to hedge and help offset potential upside risk.

The insurance does not last forever, naturally. The periods you can purchase insurance for are 2 hours, 12 hours and 48 hours. You can decide how much of your position you want to insure, 100% of your position or only partial insurance of 75%, 50% or 25%. The longer the period you are protected, the higher the premium will be.

As you fill out the insurance purchase, you will get a quote for the insurance premium, this will be the cost to purchase the insurance. You will also see the maximum payout you can get from the insurance.

I believe these concepts of protecting downside and upside will be very familiar to most options traders, and perhaps another article delving deeper into the possibilities of the mutual insurance is warranted. The key to this is to understand when there is a likelihood of high volatility, if you are unable to identify these moments, you would be buying protection blindly.

Overall, I do appreciate the ByBit mutual insurance as a new feature to the exchange. I support anything that can give the users more tools to minimize risk and reduce downside.

Order Types

Market order

Market orders are executed and filled immediately at the prevailing market price. Keep in mind with big orders that slippage might occur if there are thin order books. However, this is not a concern on ByBit since the order book depth is rather good. 

Limit order

This is an order that is placed at a specific price level and won’t execute until someone fills the order. There is no risk of slippage here, but the price might naturally move away from your order thus it’s no guarantee that it will be filled when desired. 

Conditional order (advanced order)

These types of orders can become either limit or market orders once certain price levels trigger. They are called conditional as you need to set the conditions that trigger either limit or market orders to execute. 

When using conditional orders you have the extra option of choosing which price you want to trigger on, the choices are between:

• Last traded price (ByBit current market price)
• Index price (Estimated weighted average of BTC spot prices)
• Mark price (Global spot price index)

There tends to be a little variation between them in terms of USD, last traded price is the default one and is likely more volatile than the others but it also allows you to react quicker.

With limit orders and conditional limit orders you can adjust the order longevity with three different options when using ByBit:

• Good-till-Cancelled (GTC)
  This means the order will remain active until you manually close it.
• Immediate-or-Cancel (IOC)
  The order is designed to be filled at the current best price and any unfilled orders will be canceled.
• Fill or Kill (FOK)
  Unlike IOC orders, fill or kill orders will cancel the whole order if its unable to fill your entire order at the best price. It is not possible to partly fill your order with this order, unlike IOC.

As far as stop losses and measures to minimize losses or to secure profits, there are a few tools available at ByBit, such as:

• Traditional stop loss
  Once the price reaches a certain price level, you will exit your position to reduce the risk of losing more than desired.
• Take profit
  Once the price reaches a certain price level, you will close your position to secure your profits from the trade.
• Trailing stop/Trailing take profit
  This is a rather nice feature that allows us to use the trailing feature on both stop losses and take profits.

To illustrate, let’s say the price is 10 000$ and you set your trailing stop as 100$ from the current price which means your stop is now at 9 900$. If the price were to move up to 10 500$ your trailing stop would follow automatically and now be 10 400$. As you can see, it can be a great way to reduce both risk and securing profits at the same time.

If you would like to read even more about different order types and functions, please feel free to read our guide on advanced orders and functions. It will give you a better understanding of all the different orders and functions that you are likely to encounter on all the major crypto exchanges.

Fees

The fees shown above illustrate that for market buys, which get matched instantly, you will pay the taker fee and maker rebate will be granted to those who use limit orders, in other words those that don’t get matched instantly. This in short means it pays, literally, to use limit orders. 

As for the fee rates themselves, they are what I would consider industry standards at this point. ETH fees could be regarded as slightly above average. Some exchanges offer lower fees, but in return the liquidity and security aspects tend to suffer, which will be more expensive in the long run. 

Funding

In order to have a position open at any derivative exchange, there will be a side that pays funding and a side that receives funding. The funding is a small percentage fee of your current open position. This will occur every 8 hours on ByBit, which is normal. 

The funding between competitors varies, however the monthly average tends to even out. 

To view ByBit’s funding history you can visit their funding page.

For direct comparisons between different exchanges with live updates you can check out the funding bot on twitter.

Withdrawing

Once you click withdraw, you have to insert the wallet you want to send your cryptocurrency to and the amount that you wish to send.

ByBit processes withdrawals three times a day, which is considered to be quite good compared to its main rival BitMEX which only processes withdrawal once a day. Some exchanges beat this and will do it quicker, however I think this is acceptable for most that value their security.

The reason for withdrawal times is so exchanges can avoid keeping large amounts of bitcoin in their hot wallets. Hot wallets are Bitcoin wallets that are in use and connected to the exchange. Instead, ByBit keeps most of it in their cold wallet, which are wallets that are disconnected from the exchange, such as crypto ledgers. These measures increase the security of your crypto as well as minimizes the damage if a hack were to occur.   

Support

Besides the traditional email support, ByBit also features live chat support on their website and a Telegram support group. I primarily use the telegram group for any inquiries, and I tend to receive an answer within just a couple of minutes, which is excellent. 

ByBit has employed several people responsible for taking care of their customers and any inquiries which are done in a reasonably professional and efficient manner 24/7 every day of the week. I would say that the general level of support in cryptocurrency exchanges has improved significantly over the last couple of years. 

Protection From Price Manipulation 

Throughout the crypto community, there have been many complaints about price manipulation on different exchanges, a lot of this stems from being on the wrong side a trade but sometimes it is a legitimate concern and criticism. 

To avoid the possibility of price manipulation, ByBit uses an in-house solution called the “Dual-Price mechanism” which is designed to protect users from price manipulation. 

So how does it work? The dual-price mechanism consists of both a global price index and a ByBits current trading price, which is anchored to the spot index price which then is enforced through an ingenious adaptive funding mechanism. This in short means that the global index price and Bybits market price rarely deviates too much from each other. 

It reduces the incentive and increases the difficulty for price manipulation, which ensures a safer and ethical trading environment for its users. 

ByBit Testnet

For new traders ByBit’s testnet can be a great way to ensure that you understand the mechanics and how the exchange works by trading risk-free using ‘fake’ bitcoin. This requires naturally no deposits and is completely free. For users that are familiar with the standard trading mechanisms, this is unnecessary, for those of you that want to give it a go use the link below.

ByBit Testnet

Depositing Testnet Bitcoin

Since the testnet does not use real Bitcoin the deposit procedure is slightly different.

Click the “deposit” button next to Bitcoin in your assets, copy the address. Now you will have to go to websites known as Bitcoin faucets, these sites send out free testnet Bitcoin. You can use the testnet faucet, once you are there paste in your ByBit testnet address in the faucet form and click “Get test coins”.

Mobile Trading App

If you are on the go and need to check on positions or trades it can be very convenient to have an official exchange app that you can use without having to deal with logging into exchanges on the mobile browser, which tends to provide a rather poor trading experience. Fortunately, ByBit has released its app on the apple app store and Google Play store for download.

The app itself is very straight forwards, there are some minor bugs from time to time, but otherwise it is an excellent addition for users who frequently visit ByBit. You can find the download links below.

Apple App Store Download

Google Play Download

Strategy Alerts

ByBit has very recently introduced a new tool available on its mobile app, called Strategy Alert. It is an alert tool that allows you to set alerts for when there are market movements and your set targets get hit. It will enable you to be on the move and still get updated on significant price action or when trade opportunities open up. 

There are four main features on which you can customize and set alerts to: 

• Price Alerts

Set an alert for when the price hits a certain price level. 

• Trend Shifts

Use different types of moving averages to track the trend shifts in the market.

• Local Pivots

Activate an alert for when there is a turning point from a local high to a local low in the market. 

• Market Heat

Set up alerts when there are significant movements in open interest and predicted funding rates on exchanges. 

ByBit Review Summary 

The stability of the exchange and trading engine is impressive from my experience, even in March 2020 when bitcoin experienced a 40-50% drop (depending on the exchange) all algorithms still executed flawlessly. However, it is worth mentioning that manual trades were problematic for around 60 seconds, which was quite good compared to a lot of its competitors. While its main competitor BitMEX struggles with overload more frequently.

There have never been any security breaches or hacks on the exchange to this date, which is confidence aspiring. With 24/7 support available on multiple channels, problems and bugs are easy to report and quick responses are given by the support staff to help assist with any issues or questions. 

The advanced orders are as good as I would expect from any serious exchange at this point. The visuals of the exchange could perhaps become even cleaner in my opinion, but overall I suppose this is not a significant factor when it comes to my overall satisfaction.

Overall, I will conclude that as of this moment, it is probably a quite solid choice for most users trading bitcoin on margin. I would like to see it continue its growth forward, as the great depth of the order books and volume is to a certain degree dependent on new users, which of late has been lacking. At the end of the day, liquidity is king; whoever provides me less slippage will probably have my business as long as it’s relatively stable. Bybit proves itself to be a solid contender for now, it remains to be seen if it will manage to stay relevant with enough liquidity and attractive products in the future.

All exchange reviews may be subject to change if the exchange becomes better or worse after the review has been published or the information becomes outdated.