Should you trade on Bitmex or Coinbase?
Accepting cash for crypto
We all know the journey trading cryptocurrencies almost always start with cash. Anyone who wants to buy cryptocurrencies needs to visit a platform to deposit fiat money (aka cash)in order to buy BTC or other major cryptocurrencies.
Unless you haven’t received cryptocurrency from someone as a donation or in exchange for a product or service this is the path you will follow as well.
In fact, it is not even BTC, Bitmex calls all its BTC pairs with its original naming XBT. They are pretty much the same thing.
If you have never traded on Bitmex the term XBT may confuse you but it really shouldn’t.
Let’s say you will deposit 1 BTC to your Bitmex wallet, your BTC will appear as you have 1 XBT in your wallet.
Starting with the cash you need to visit an exchange like Coinbase or Binance that accepts your cash to sell you cryptos.
For a myriad of reasons, the market liquidity is important since primarily affects how instantly you can open and close positions.
In general, a liquid market is positively correlated with less risk, because there is typically someone ready and able to take the opposite side of a specific position.
Both Bitmex and Coinbase are great platforms in terms of liquidity. In fact market liquidity usually is only a problem for smaller market cap coins or unreputable exchanges.
Unless you don’t want to trade a substantially large amount of crypto there should be nothing to worry about trading with both of these platforms.
Leverage Trading (aka Margin Trading)
Margin trading or trading with leverage is borrowing money from the exchange to buy a certain asset. It shouldn’t surprise you there is no free money in the universe and exchanges are no exception.
By borrowing money you will multiply your buying power in result earning potential while you multiply your risk as well. I highly discourage you from trading on high leverage since it has high risk.
Bitmex offers leverage trading up to 100x. That is totally insane since even a professional trader with a long trading history is almost guaranteed to fail.
That said, if you like to take advantage of 2x or maybe up to 10x leverage trading Bitmex can be a good place to trade.
Yes, you can earn big money once or twice, but the habit of high leverage trading will lose you more money eventually.
Take my word, and stay away from margin trading since cryptocurrencies are already very volatile and can be profitable without using leverage at all.
Coinbase doesn’t offer margin trading at least by the time I write this post.
Ease of use
Coinbase has a much easier to use the platform and everything is more intuitive. Because the primary business idea behind Coinbase is selling cryptocurrencies for cash but not trading cryptos in between.
When it comes to Bitmex, it is a totally different story. Bitmex accepts only BTC deposits, and its primary business goal is generating revenue from the trading commissions.
Especially, with the ability to leverage trading you can expect things to become even more complicated.
That said, you can definitely get used to Bitmex if you spend some time to discover their platform. One thing I want to warn you to be extra cautious especially if you plan to start trading directly on day one.
You can quickly drain your account if you trade on Bitmex while you are unfamiliar with its platform.
Fortunately, Bitmex also created the BitMEX Testnet platform that allows paper trading. You can go and create an account and start trading as if you have actual crypto in your account.
Coinbase is a San Francisco based business and managed according to the rules and regulations the US government dictates. Trading on Coinbase all your activity on the platform is totally traceable by the government.
You have made some profit, guess what, your earnings will be taxable according to the laws and legislation in the US.
Bitmex on the other hand is based on Seychelles. The amount of cryptocurrency you deposit and your potential earnings are not taxable since it is your money in another country.
Therefore, it is safe to say you have more privacy trading on Bitmex rather than Coinbase.
US citizens are banned from trading on BitMEX due to the US. legislation. Technically, any trading platform working with US citizens should be authorized by the CFTC (Commodity Futures Trading Commission).
I am not sure if you could trade on Bitmex if you somehow bypass the ban with a reliable VPN service.
But trading in both platforms you should expect to submit your ID for verification purposes, and maybe even a photo of you taken when you hold your ID and a piece of paper with the current date on it.
Trading fees on Coinbase is higher than on Bitmex for one good reason. Buying crypto with cash will occur more fees than exchanging cryptos in between.
Coinbase charges 0.05% – 0.50% depending on traded volume at once. However, if you buy crypto with the cash you should expect to pay much more. Purchases made by credit or debit cards are subject to a fee of 3.99% percent while bank transfers are charged a fee of 1.49%.
Trading fees on Bitmex is 0.075% of the total order value for takers. However, makers get paid 0.025% for making trades. Therefore makers pay 0.025% less in trading fees.
It is expressed by many customers that Coinbase’s customer response to support requests is quite late. You should expect a faster response time trading on Bitmex.
Bitmex customer support assists its clients in English, Russian, Chinese, Korean, and Japanese languages.
If you are a native speaker of one of those languages you may have an easier time keeping in touch with customer support. I believe Coinbase provides customer support only in the English language at this time.
Although both crypto exchanges are great here are other alternatives that are identically good.
Finally, both Bitmex and Coinbase are reputable cryptocurrency exchanges, and they serve different goals. If you are buying to hold and have no plan to trade cryptocurrencies you have almost nothing to do with Bitmex.
Buy your coins from Coinbase or even Binance and hold them either on the exchange wallet or any other place more secure like a hardware wallet.