{"id":178342,"date":"2021-02-15T02:00:00","date_gmt":"2021-02-14T23:00:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/usdt-settled-futures-contracts-are-gaining-popularity-heres-why\/"},"modified":"2021-02-15T02:00:00","modified_gmt":"2021-02-14T23:00:00","slug":"usdt-settled-futures-contracts-are-gaining-popularity-heres-why","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/usdt-settled-futures-contracts-are-gaining-popularity-heres-why\/","title":{"rendered":"# USDT-settled futures contracts are gaining popularity, here\u2019s why"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a232502c1bc1\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a232502c1bc1\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/usdt-settled-futures-contracts-are-gaining-popularity-heres-why\/#Why_BTC-settled_contracts_are_for_more_experienced_traders\" >Why BTC-settled contracts are for more experienced traders<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/usdt-settled-futures-contracts-are-gaining-popularity-heres-why\/#USDT-settled_contracts_are_riskier_but_easier_to_manage\" >USDT-settled contracts are riskier but easier to manage<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># USDT-settled futures contracts are gaining popularity, here\u2019s why <\/strong>&#8221;<\/p>\n<div class=\"post-content\" data-v-5a136f3a>When BitMEX launched its Bitcoin (BTC) perpetual futures market in 2016, it created a new paradigm for cryptocurrency traders. Although this was not the first platform to offer BTC-settled inverse swaps, BitMEX brought usability and liquidity to a broader audience of investors.<\/p>\n<p>BitMEX contracts did not involve fiat or stablecoins and even though the reference price was calculated in USD all profits and losses were paid in BTC.<\/p>\n<p>Fast forward to 2021, and the Tether (USDT) settled contracts have gained relevance. Using USDT-based contracts certainly makes it easier for retail investors to calculate their profit, loss and the required margin required but they also have disadvantages.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Why_BTC-settled_contracts_are_for_more_experienced_traders\"><\/span>Why BTC-settled contracts are for more experienced traders<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2021-02\/134ab7cc-ebf0-4ab6-8de7-0cf8bd341f06.png\"><figcaption style=\"text-align: center;\"><em>Binance coin-margined perpetual futures. Source: Binance<\/em><\/figcaption><\/figure>\n<p>Binance offers coin-margined (BTC-settled) contracts and in this case, instead of relying on USDT margin, the buyer (long) and the seller (short) are required to deposit BTC as margin.<\/p>\n<p>When trading coin-margined contracts there is no need to use stablecoins. Therefore, it has less collateral (margin) risk. Algorithmic-backed stablecoins have stabilization issues, while the fiat-backed ones run risks of seizures and government controls. Therefore, by exclusively depositing and redeeming BTC, a trader can bypass these risks.<\/p>\n<p>On the negative side, whenever the price of BTC goes down, so does one&#8217;s collateral in USD terms. This impact h<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ens because the contracts are priced in USD. Whenever a futures position is opened the quantity is always in contract quantity, either 1 contract = 1 USD at Bitmex and Deribit, or 1 contract = 100 USDat Binance, Huobi and OKEx.<\/p>\n<p>This effect is known as non-linear inverse future returns and the buyer incurs more losses when BTC price collapses. The difference grows wider the further the reference price moves down from the initial position.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"USDT-settled_contracts_are_riskier_but_easier_to_manage\"><\/span>USDT-settled contracts are riskier but easier to manage<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>USDT-settled futures contracts are easier to manage because the returns are linear and unaffected by strong BTC price moves. For those willing to short the futures contracts, there is no need to buy BTC at any time, but there are costs involved to keep open positions.<\/p>\n<p>This contract doesn&#8217;t need an active hedge to protect collateral (margin) exposure, thus it\u2019s a better choice for retail traders.<\/p>\n<p>It is worth noting that carrying long-term positions on any stablecoins has an embedded risk, which increases when third party custody services are used. This is one reason why stakers can obtain over 11% APY on stablecoin deposits.<\/p>\n<p>Whether an investor measures returns in BTC or fiat also plays a massive part in this decision. Arbitrage desks and market makers tend to prefer USDT-settled contracts as their alternative investment is either staking or low-risk cash and carry trades. <\/p>\n<p>On the other hand, cryptocurrency retail investors usually hold BTC or switch into altcoins aiming for higher returns than a fixed APY. Thus, by being the preferred instrument of professional traders, USDT-settled futures are gaining more traction.<\/p>\n<p><em>The views and opinions expressed here are solely those of the <\/em><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/noshitcoins\"><em>autho<\/em><em>r<\/em><\/a><em> and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.<\/em><\/p>\n<p><template data-name=\"subscription_form\" data-type=\"markets_outlook\"><\/template><\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/usdt-settled-futures-contracts-are-gaining-popularity-here-s-why\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# USDT-settled futures contracts are gaining popularity, here\u2019s why &#8221; When BitMEX launched its Bitcoin (BTC) perpetual futures market in 2016, it created a new paradigm for cryptocurrency traders. Although this was not the first platform to offer BTC-settled inverse swaps, BitMEX brought usability and liquidity to a broader audience of investors. BitMEX contracts did&#8230;<\/p>\n","protected":false},"author":1,"featured_media":178343,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDIvYTk3N2YzOWMtNTBhNy00OThmLThhMWMtNTFiMjM3ZTEzNDg3LmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74867,74862,74972,74937,74863,75846,79248,73785,36041],"class_list":["post-178342","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-altcoin","tag-bitcoin","tag-bitcoin-futures","tag-bitcoin-price","tag-cryptocurrencies","tag-futures","tag-trading101","tag-markets","tag-tether"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/178342","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=178342"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/178342\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/178343"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=178342"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=178342"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=178342"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}