The Differences Between USDT-M and Coin-M Futures Contracts

USDT-M Futures Contracts

USDT-M futures contracts represent a category of linear derivative products that are denominated and settled in USDT—a stablecoin pegged to the value of the US Dollar. These contracts are offered on major cryptocurrency futures trading platforms.

One of the primary advantages of USDT-M futures is the ease of profit calculation by referencing fiat currency values. This intuitive approach makes it simpler for traders to understand their returns. For example, when you earn 1,000 USDT in profit, you can easily estimate that your profit is worth approximately 1,000 USD, since 1 USDT is tightly pegged to 1 USD.

The platform supports hundreds of trading pairs for USDT-M futures contracts, allowing traders to select their preferred pairs from the available options. Before opening a position, ensure that you have sufficient USDT available in your futures account to serve as collateral.

Coin-M Futures Contracts

Coin-M futures contracts are inverse futures contracts that utilize cryptocurrency as collateral, meaning the cryptocurrency serves as the quote currency. For example, in BTC Coin-M futures, BTC is used as the initial margin or for profit calculations.

The most significant advantage of Coin-M futures is improved capital efficiency. Beyond simply holding a particular token, you can simultaneously trade futures contracts with that same token. Additionally, if you wish to convert your returns into fiat currency, since the token is used as margin, Coin-M futures inherently come with built-in leverage. While this increases risk slightly, it also amplifies potential profits.

The platform currently offers Coin-M futures for BTC and ETH. Before opening a position, ensure you have adequate BTC or ETH assets available in your futures account.

How to Choose Between Them

One of the most important reasons traders select Coin-M futures is that it provides a funding rate for their positions, making it an ideal choice for traders seeking long-term positions. Holders of BTC or ETH do not need to exchange any of their holdings for USDT to post as margin and trade on the futures platform. In other words, they avoid the need to sell any cryptocurrency at unfavorable prices.

When market conditions are bullish, investors typically prefer to maintain their cryptocurrency assets. Since Coin-M futures are settled in cryptocurrency, any profits earned are directly converted into the token, facilitating long-term holdings. This approach offers an excellent way to generate substantial returns when the token appreciates significantly over an extended period.

Conversely, if users do not hold cryptocurrency assets beyond USDT, they may consider utilizing USDT-M futures to benefit from the hundreds of trading pairs available. This allows them to generate profits through leveraged investment strategies.

Summary

Both USDT-M and Coin-M futures contracts offer distinct advantages. Traders can engage in futures trading according to their individual needs and investment strategies, choosing the contract type that best aligns with their portfolio composition and trading objectives.

FAQ

What are the basic definitions of USDT-M and Coin-M futures contracts, and what are their differences?

USDT-M futures settle in stablecoins, offering lower risk and price stability. Coin-M futures settle in cryptocurrencies, suited for long-term investors during bull markets seeking higher returns.

What are the differences between USDT-M and Coin-M futures in terms of margin and leverage?

USDT-M futures use USDT as margin and settlement currency, offering higher leverage ratios. Coin-M futures use the underlying coin (like BTC) as margin, typically with lower leverage but higher risk exposure to coin volatility.

What are the differences in settlement methods between USDT-M and Coin-M futures contracts?

USDT-M futures settle in stablecoins, while Coin-M futures settle in the underlying digital asset. USDT-M offers price stability in settlement, whereas Coin-M exposes you to asset price fluctuations during settlement.

Which carries greater risk, USDT-M futures or Coin-M futures?

Coin-M futures carry greater risk due to larger price volatility. USDT-M futures are more stable since they settle in USDT stablecoin, making them better for risk management.

Should beginners choose USDT-M or Coin-M futures contracts for trading?

Beginners should choose USDT-M futures for stable USDT settlement, or Coin-M futures for cryptocurrency settlement. Your choice depends on whether you prefer stablecoins or crypto assets.

What are the fee differences between USDT-M and Coin-M futures contracts?

Coin-M futures charge 0.02% taker fee with 0% maker fee, while USDT-M futures typically offer lower or zero maker fees. Coin-M uses crypto as margin with USDT settlement, while USDT-M uses USDT for both margin and settlement.

What are the differences between USDT-M and Coin-M futures in extreme market conditions?

USDT-M futures settle in stablecoins, reducing volatility exposure during extreme price swings. Coin-M futures settle in cryptocurrencies, potentially facing larger fluctuations. Stablecoin settlement offers more protection for risk-averse traders.

How to choose an appropriate trading strategy between USDT-M and Coin-M futures?

Choose USDT-M for stable income and short-term trading with predictable returns. Select Coin-M for long-term appreciation and higher volatility exposure. Consider your risk tolerance, liquidity needs, and market outlook when deciding between the two contract types.