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Bitget Beginner's Guide — A Comprehensive Introduction to USDT-M Futures, USDC-M Futures, and Coin-M Futures

Bitget Beginner's Guide — A Comprehensive Introduction to USDT-M Futures, USDC-M Futures, and Coin-M Futures

Beginner
2024-04-23 | 10m

Overview

● What are the main types of futures trading? What are the differences between them?

● Analysis of the concepts in USDT-M perpetual futures, USDC-M perpetual futures, Coin-M perpetual futures, and Coin-M delivery futures.

● Which type of futures trading is more suitable for beginners?

Futures trading types

There are two main types of futures trading in crypto: USDT-M/USDC-M Futures and Coin-M Futures. Bitget offers USDT-M/USDC-M Futures, Coin-M Futures, and Delivery Futures. USDT-M/USDC-M Futures, also known as forward futures, refer to futures that are settled in stablecoins such as USDT and USDC. Examples of such futures are BTCUSDT and ETHUSDC (note that the quote currency is in the stablecoin). On the other hand, Coin-M Futures, also known as inverse futures, refer to futures that are settled in crypto, such as BTCUSD and ETHUSD. It’s worth noting that USDT-M/USDC-M Futures can also be referred to as USDT-M/USDC-M perpetual futures, which, as the name suggests, can be held in perpetuity. In contrast, Coin-M Futures are divided into Coin-M perpetual futures and Coin-M delivery futures, with the latter having a delivery period. Investors are advised to clearly distinguish the types of futures they are trading.

For the benefit of beginners, this article shall elaborate on these futures types and outline their advantages and disadvantages.

Differences

USDT-M/USDC-M Futures (forward futures)

Coin-M Futures Perpetual Futures (inverse futures)

Coin-M Futures Delivery Futures (inverse futures)

Quote currency

Usually stablecoins such as USDT and USDC

Uusally Bitcoin or other cryptocurrencies

Uusally Bitcoin or other cryptocurrencies

Common trading pairs

BTCUSDT, ETHUSDC

BTCUSD, ETHUSD

BTCUSD0628, ETH0927

Notional value

In fiat

In crypto

In crypto

Expiration date

None

None

Yes

Transaction fees

Funding rate

Funding rate

Delivery fee

Futures characteristics

PnL is intuitive

PnL conversion required

PnL conversion required

Suitable users

Beginners

Beginners/Experts

Experts

USDT-M/USDC-M Futures (Perpetual)

USDT-M/USDC-M Futures, also known as forward futures, are futures based on fiat stablecoins (usually USDT or USDC). In USDT-M/USDC-M Futures, the value of the contract is calculated in USD. These futures allow investors to assess the value and risks of the contract more intuitively. Investors can trade cryptocurrencies directly with stablecoins such as USDT and USDC without actually purchasing Bitcoin or other cryptocurrencies, thus avoiding the risk of price drops in these coins. USDT-M/USDC-M Futures are particularly suitable for beginners who are new to futures trading.

Using BTCUSDT perpetual futures as an example, if a user holds 1 BTCUSDT and the price of BTC rises by $1000, the user will make a profit of $1000, and vice versa. Since USDT-M/USDC-M Futures are always settled in USDT or USDC, all margin and PnL are also calculated in USDT or USDC.

Bitget offers USDT-M perpetual futures and USDC-M perpetual futures. Here, "perpetual" refers to the term of the contract. Simply put, perpetual futures have no expiration date and can be held until the user chooses to close the position. This allows users to trade more flexibly without having to worry about expiration dates. Perpetual futures use funding rates to maintain price stability. The funding rate can be understood simply as the interest paid on borrowing funds from the exchange to open a futures position.

As mainstream products crypto futures trading products, USDT-M/USDC-M perpetual futures have a much higher trading volume than other futures types.

How to trade

Bitget Futures is designed to be simple and straightforward. Just log in to the Bitget website and click on Futures in the navigation bar to trade BTCUSDT perpetual futures. Bitget offers a wide range of USDT-M Futures products. To trade other cryptocurrencies, simply click the arrow on the right hand side of BTCUSDT and select the futures you want to trade. To trade USDC-M perpetual futures, just navigate to the USDC-M Futures page from the right side of the menu bar.

Bitget Beginner's Guide — A Comprehensive Introduction to USDT-M Futures, USDC-M Futures, and Coin-M Futures image 0

Using the app is even easier. After opening the app, tap Trade in the navigation bar at the bottom and select Futures . Then, enter the page for BTCUSDT perpetual futures. Similarly, you can just tap the arrow to the right of BTCUSDT and select the futures you want to trade. To trade USDC-M perpetual futures, just tap USDC-M at the top of the page.

See more: How to make your first futures trade

Coin-M Perpetual Futures and Coin-M Delivery Futures

Coin-M Futures, also known as inverse futures, are futures based on cryptocurrencies. In Coin-M Futures, the value of the contract is calculated in cryptocurrency. These futures allow investors to participate in the market directly with crypto, ensuring they don't miss out on the price increases they would have if they had used stablecoins instead.

Coin-M Futures are divided into Coin-M perpetual futures and Coin-M delivery futures. Coin-M perpetual futures are similar to USDT-M perpetual futures, except that the value of Coin-M futures is calculated in cryptocurrency. While Coin-M perpetual and USDT-M perpetual futures can be held indefinitely, Coin-M delivery futures are distinct from the former in terms of its timeframe. Delivery futures comes with a specified expiration date, meaning users are required to deliver a specified amount of assets at a specific future date. The delivery date is generally pre-determined. Holders of these futures contracts must fulfill their delivery obligations in accordance with the contract on the delivery date.

Using BTCUSD0628 delivery futures as an example, the buyer and the seller agree to trade the contract at the delivery price at 4:00 PM on June 28, 2024 (UTC+8). Assuming the delivery price is $70,000, the seller sells 5 BTC at $70,000, and the buyer buys 5 BTC at $70,000. Of course, the buyer or seller can choose to close their position before the delivery date at the current price.

It is important to note that delivery involves the settling of the contract. Whether you are making a loss or a profit, the exchange will close and settle the position at the agreed time (the delivery time).

Generally, Coin-M Futures are suited for miners or long-term holders. As futures are settled in the underlying cryptocurrency, any profits will contribute to long-term holdings, and the value of your collateral will grow accordingly during a bull market.

You can also hedge your positions in the futures market. To hedge a position, simply open a short position in any Bitget Coin-M Futures. If the price of the underlying asset falls, the profit of the futures position will offset the losses in your portfolio.

How to trade

Log in to the Bitget website, click Futures in the navigation bar, then click Futures Trading in the upper right corner of the futures trading page and select Coin-M Perpetual Futures or Coin-M Delivery Futures. Alternatively, as illustrated below, you can also click the arrow on the right hand side of trading pair, select Coin-M Futures, then click All on the right and select Perpetual or Delivery.

Bitget Beginner's Guide — A Comprehensive Introduction to USDT-M Futures, USDC-M Futures, and Coin-M Futures image 1

For app users, you can tap Trade in the navbar at the bottom and select Futures. When you are in the trading page for BTCUSDT perpetual futures, tap Coin-M at the top, then select Perpetual or Delivery by tapping the arrow on the right hand side of BTCUSDT.

See more: How to make your first futures trade

Conclusion

For beginners, deciding between USDT-M/USDC-M Futures and Coin-M Futures depends not just on personal preferences but also on the overall market conditions. For example, USDT-M/USDC-M Futures can effectively mitigate the risk of significant price swings in volatile markets. Compared to Coin-M Futures, USDT-M/USDC-M Futures can effectively reduce the risk of large price fluctuations during periods of high market volatility. This is because USDT-M Futures are priced and settled in USDT, and the prices of these stablecoins are usually more stable than cryptocurrencies. During periods of high price volatility, the settlement currency of USDT-M/USDC-M Futures stabilizes the contract value, thereby reducing investor risk.

Additionally, the settlement currency of USDT-M/USDC-M Futures also makes trading more intuitive. For example, the value of 1 USDT is almost the same as 1 USD, making it easier for investors to calculate their gains or losses. USDT-M/USDC-M Futures are quoted and settled in a common settlement currency (such as USDT), which increases trading flexibility. Moreover, multiple futures contracts can use the same settlement currency, eliminating the need to purchase base tokens as margin for futures positions, thus reducing costs.

Note that when going long, USDT-M and USDC-M Futures offer less profits than Coin-M Futures but carry less risk. Conversely, when going short, USDT-M and USDC-M Futures offer higher profits than Coin-M Futures but carry greater risks.

In conclusion, USDT-M/USDC-M Futures and Coin-M Futures have their own advantages and characteristics. Investors can choose the futures type that best suits their risk tolerance and investment objectives.

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