During the interview with TechGraph, Gracy Chen, Bitget Global’s Managing Director (MD) underlines the concept of crypto derivatives trading and their role in meeting investor demands despite higher risks. Furthermore, Chen also discussed Bitget’s proactive approach to navigating crypto regulations and obtaining Virtual Asset Service Provider (VASP) registration in Poland and Lithuania.
Read the complete interview:
TechGraph: How has the cryptocurrency and derivatives market evolved over the past year, and what trends have you observed in terms of trading volumes, user demographics, and asset classes being traded?
Gracy Chen: In the past year, we’ve noticed a lot of development in the landscape of trading. One of the trends we’re witnessing is the increasing sophistication of financial products in the crypto space. These products are designed to be versatile and offer a range of features to investors. For instance, there’s a growing category of structured products that aim to simplify complexity and maximize risk-adjusted returns.
A prime example in the decentralized finance (DeFi) world is yield optimizers. These are becoming incredibly popular. They work to boost yields while minimizing the risk to your initial investment. What’s great is that many of them come with an auto-compounding feature, which can be a real game-changer for investors.
On the more traditional side, centralized exchanges (CEXs) are also getting into the game even at Bitget we have SharkFin – a low-risk and capital-guaranteed structured investment product that risk-averse investors usually prefer. These structured products often come with principal protection, a particularly appealing feature when the market outlook is uncertain, as it may be in 2023.
According to TokenInsight’s Crypto Exchange Report 2023Q2, Bitget ranks fourth in trading volume among all CEXs, and its market share increased by 1.81% to 8.7%, achieving the second-highest increase in market share in terms of trading volumes. Our spot market share doubled in just three months, thanks to the addition of 81 new coins and various new AI-empowered trading features.
Bitget’s futures markets have also witnessed substantial growth, outpacing other CEXs. A recent report on copy and social trading released by cryptocurrency exchange platform Bitget shows that GenZs account for 44% of all copy trading users. They are closely followed by users within the 25 to 35 age range accounting for 32% of all copy trading users, the 35 to 55 age bracket coming in third place with 17%, and those above 55 making up 7% of the total copy trading user base. The research disclosed that over 72% of traders below 25 utilize Bitget for copy trading, with another comparable proportion of 65% seen in those within the 55 to 64 age range.
Furthermore, the report noted that geographically, the majority of copy traders on Bitget were resident in Western Europe, East Asia, and Southeast Asia. Western Europe made up the largest proportion, with 31% of all active copy traders, followed by traders in East Asia at 26%, and Southeast Asia at 19%.
TechGraph: Bitget is primarily focused on derivatives trading. Could you explain what derivatives are and how they differ from spot trading in the context of cryptocurrencies?
Gracy Chen: Bitget has emerged to become one of the biggest crypto derivatives exchanges in the world. In less than a year it grew from being in the list of top 100 to top 5. Derivatives are more risky than usual trading.
In derivatives trading, users buy and sell a derivative contract purely for speculation. Because a derivative contract ‘derives’ its value from an underlying market, it enables you to trade on the price movements of that market without needing to purchase the asset itself.
There’s a plethora of leverage options, basically meaning that users can trade without having that kind of amount in their wallets and speculate on the market prices of the underlying assets. While derivatives like futures can carry higher risks, these instruments play an important role in meeting investor demand and contributing to market maturation.
TechGraph: What advantages do derivatives trading offer to investors compared to traditional crypto trading?
Gracy Chen: Derivatives trading offers users the ability to earn more than their initial investments. They enable users to make more income on their assets a lot faster. Nevertheless, irrespective of the advantages, trading in derivatives bears a lot more risk than traditional crypto trading.
Firstly, it’s important to keep in mind that cryptocurrencies by nature are extremely volatile and derivatives make them riskier. It goes by the usual law, the more money-making opportunities, the riskier the assets to deal with.
TechGraph: Cryptocurrency derivatives can be highly volatile. How does Bitget assist traders in managing and mitigating their risk?
Gracy Chen: Bitget is the world’s largest crypto copy trading platform. We have over 120K professional traders that allow new users to copy trade. Features, like take profit and stop loss, are important for new users to understand while copy-trading the professionals.
At Bitget, we mitigate risks with our protection fund valued at $300 million. It gives our platform an extra layer of resilience against cybersecurity threats.
Bitget’s reserve ratio is over 200%, which is twice the standard of the industry, showing that users’ assets are sufficiently covered by the fund. In addition to our Proof of Reserves, the fund shows that we’re committed to protecting user assets and that we operate with transparency and integrity.
TechGraph: Are there any risk management strategies or tools that Bitget recommends for traders in the crypto derivatives market?
Gracy Chen: The crypto copy-trading feature is the best tool for newbie traders. Users can look at professional traders and their rankings, their wins and losses, and trade looking at their data accordingly. We also have Bitget Academy, which is a Blockchain, Crypto, and Trading online education platform for first-timers, experienced investors, and everyone in between. It provides in-depth guides, practical tips, and market updates.
In addition, we launched Bitget Insights last October, which is a newsfeed community where verified users can share their financial analyses and views with their followers, helping them make smarter financial decisions. Overall, maintaining a good diverse portfolio. Additionally, Stop Loss and Take Profit are the best remedies to get started with managing risks.
TechGraph: Cryptocurrency regulations are evolving worldwide. How does Bitget navigate regulatory challenges, and what steps have you taken to ensure compliance with relevant laws and guidelines? Are there any plans to expand services into regions with stricter crypto regulations?
Gracy Chen: We’ve been diligently exploring the licensing requirements and application procedures in all our target markets. A dedicated legal and compliance team closely monitors cryptocurrency regulations worldwide to keep us well-informed about the latest developments.
This proactive approach enables us to stay ahead of regulatory changes and maintain our commitment to compliance. This year we completed the registration process as a Virtual Asset Service Provider (VASP) in Poland, demonstrating our dedication to adhering to local crypto regulations.
We’ve also taken similar steps in Lithuania, showcasing our commitment to compliance in various jurisdictions. For different countries, we alter our approach accordingly.
We’ve made KYC mandatory on the platform and utilize AML intelligence to track cyber crimes. Our security flags suspicion and we’re constantly upgrading it for the safety and security of our users. We plan to be as compliant as we can for regions with stricter regulations.
TechGraph: How does Bitget support its users in understanding and navigating the complex world of cryptocurrency and derivatives trading?
Gracy Chen: We have the Bitget Academy which is a Blockchain, Crypto, and Trading online education platform for first-timers, experienced investors, and everyone in between. It provides in-depth guides, practical tips, and market updates. One can learn about signing up with Bitget, tips and tricks to trade crypto, details on regulations and taxes, and courses on blockchain for free on the portal. This is our top initiative towards accelerating crypto awareness.
TechGraph: Liquidity has been a significant concern in cryptocurrency derivatives markets. How does Bitget address liquidity issues for its users?
Gracy Chen: With over 20 million registered users in more than 100 countries and regions around the world, as well as top investment institutions on board, like Dragonfly Capital and SNK, the platform boasts a high degree of liquidity. This means traders can buy and sell cryptocurrencies quickly and easily without having to worry about the market being slow or illiquid.
Our index price mechanisms gather live price data from dozens of spot exchanges to derive fair benchmark indexes. This accurate price discovery provides confidence for liquidity providers to efficiently make markets on our derivatives platforms.
TechGraph: Lastly, how does Bitget plan to adapt and innovate in response to potential market fluctuations or disruptions? And what can users expect from Bitget in terms of new features or products in the near future?
Gracy Chen: Well, despite the ongoing ups and downs in the crypto world, Bitget is charging ahead with some exciting plans. Bitget was the only CEX to increase its futures trading volume in 2023 following the FTX collapse. We’ve seen a remarkable growth in trading volumes from year-to-date, which is pretty impressive given the volatility in this space. Currently, we do about $10B a day ($6B futures $4B spot), which is a massive increase for us from last year.
Looking ahead, Bitget is committed to strengthening and innovating its product offerings, as well as promoting wider adoption of cryptocurrency trading around the world, becoming a bridge connecting CeFi and DeFi.
Our vision is to create user-centric products that grant everyone equal access to a blockchain-based future. And to this vision, Bitget’s mission is to inspire individuals to embrace crypto with simple yet powerful tools.
- continue to strengthen the feature of copy trading by attracting more elite traders and exploring more AI technologies to enhance the accuracy and reliability of the copy trading function.
- go beyond derivatives by expanding the range of services with innovative products such as MegaSwap, an advanced DeFi aggregator that gathers liquidity from the top 10 DEXs, allowing users to swap between over 10,000 coins for the best price and lowest fee and developing its spot trading with a series of coin listings of hot trending tokens.
- leverage sponsorship to do more education and CSR in crypto, by establishing high-profile partnerships with credible names like Lionel Messi, Juventus, and other reputable organizations. These partnerships serve as powerful tools that increase awareness of Bitget’s platform and help introduce crypto to a broader audience.
One step at a time, we are optimizing our products to provide more accurate and timely data for elite traders and ensure safer and more convenient operations for copy traders.
In addition, we are incorporating AI to make advanced trading strategies more accessible to novice traders such as the Martingale or the CTA (Commodity trading advisor) strategy.
The bot conducts backtests using recent historical data, intelligently identifying optimal parameters to adapt to market conditions. This eliminates the complexities of configuring various intimidating parameters, making it user-friendly for traders of all experience levels.
Recently, we launched the Smart Portfolio bot, which is an intelligent bot that continually and dynamically rebalances positions within a user-selected portfolio of cryptocurrencies, ensuring a constant proportion of each coin is maintained.
In early June, Bitget became the first crypto exchange to support an EVM-compatible address. The new feature will elevate the trading experience for its users to use a single address for multiple blockchains, as users can trade and store assets with one EVm-compatible address through multiple chains on the Bitget platform, including Ethereum, Polygon, Binance Smart Chain, Arbitrum One, Optimism and other chains in Ethereum’s layer 2 ecosystem.
If users add an EVM address to their accounts during transactions and the withdrawal network is included in the EVM address, they will be able to withdraw directly to the EVM address, thus bypassing several intermediary features like bridges and platform hopping. Bitget is dramatically simplifying the trading experience for users. Along with the Trade Smarter philosophy, we will enhance our copy trading feature and launch more AI-empowered features.