Best Bitcoin BTC Inverse Futures Trading Site with High Leverage

Inverse Perpetual VS USDT Perpetual – Where to trade?

We list where to find the best Bitcoin BTC Inverse Perpetual Futures Trading contracts. We compare, and some of the top trading sites for cryptocurrency.

➤Crypto inverse perpetual contracts are margined and settled in the cryptocurrency. To trade BTCUSDT inverse contract, you will need BTC to open the contract, and the profit/loss will be calculated and settled in BTC.

List: Best Inverse Perpetual Futures Trading Sites

The best Bitcoin BTC inverse perpetual and future trading sites are listed in the table below.

What are crypto inverse futures?

Crypto inverse perpetual contracts or futures are crypto-margined trading instruments quoted in USD but settled in the underlying crypto (BTC, ETH, etc).

Example inverse perpetual contracts

To open an inverse contract for ETHUSD, you must hold ETH for margin in the trading account.

Your profits or losses when closing your position will be paid or subtracted in ETH.

➤Read more about crypto inverse futures in the question section at the end of the article.

Crypto Inverse Futures Calculation Example

We use a BTCUSD inverse perpetual futures contract as an example.

Since it’s an inverse contract, if the price falls, the payout in Bitcoin has to be higher to match the Dollar value.

  • If the BTCUSD price goes up 10%, your payoff is 9.09% in BTC
  • If the BTCUSD drops 10%, your BTC payoff is 11.1%.

See more detailed and complex calculation examples on inverse perpetual contracts from Bybit’s help.

Crypto Inverse Futures Hedging Example

Let’s now consider the following example to solidify our understanding of shorting inverse futures (fees and other costs neglected).

  • Futures price: 5,000 BTC/USD
  • Contract size: 1 USD
  • Direction: SHORT
  • Position size: 10,000 contracts
  • Margin: 2 BTC (100% required, no leverage)
  • Short P/L: -(1/entry – 1/exit)*number_of_contracts

Each dollar is worth 1/5,000 = 0.0002 BTC in bitcoins, so 10,000 contracts are worth 10,000*0.0002 BTC = 2 BTC. This amount is your full margin required to open a short position for ten thousand contracts at 5,000 BTC/USD.

Next, the price goes to $7,500 and your P/L is -0.66666666 BTC [-(1/5,000 – 1/7,500)*10,000]. We deduct this amount from the initial margin posted and end up with 1.33333333 BTC [2 – 0.66666666]. At the current price of 7,500 BTC/USD, this amount is equal to exactly $10,000 [1.33333333 * 7,500].

Now, the price goes in the direction of the short to $2,500, and P/L is equal to +2.00 BTC [-(1/5,000 – 1/2,500)*10,000]. We add this amount to the initial margin of 2.00 BTC and get 4.00 BTC in total. At 2,500 BTC/USD, four bitcoins are worth exactly $10,000 [4.00 * 2,500].

You can see that in both cases, our position is worth $10,000 no matter what (note that we didn’t apply any fees imposed by exchanges to these calculations to make it more simple).

See the full article for hedging with perpetual crypto futures.

Bybit Inverse Perpetual Contracts

The Bybit inverse perpetual contracts use BTC/ETH/EOS/XRP as the base currency.

Traders need to confirm traded quantity in terms of USD (Quoted currency) and then use their base currency (such as BTC, ETH) to calculate margin, profit, and loss.

If a trader wants to trade a BTCUSD inverse contract, he must use BTC as his base currency. If he deals on ETHUSD contracts, he needs to hold ETH. 

Bybit Inverse Contract Trading Fees

Inverse Perpetuals: The maker fee starts at 0.01% and the taker fee at 0.06%.

 See full fee schedule from Bybit.

Bybit Inverse Contract Pros and Cons

Pros

  • You can keep your crypto as collateral which is very favorable in a bull market (But vice versa in a bear market where your collateral decreases if the crypto loose in value)
  • Relatively many listed inverse perpetual contracts
  • High leverage available

Cons

  • More complicated to calculate profits and losses than linear perpetual contracts and futures

M=Maker, T=Taker

Kucoin COIN M Inverse Perpetuals

On Kucoin, you can trade COIN M inverse perpetuals for BTC, ETH, DOT, and XRP. 

Kucoin Inverse Contract Trading Fees

There are two different Kucoin perpetual trading fees

  • Trading fees for opening and closing a perpetual contract
  • Funding rate to maintain your position

Kucoin perpetual maker fee starts at 0.02% and the taker fee starts at 0.06%.

You can pay lower Kucoin perpetual fees by

  1. Trade larger volumes
  2. Hold the Kucoin token
  3. Use our referral link

Read more about Kucoin trading fees.

The funding rate is 0.01%, and you can find it on the Kucoin trading screen.

Kucoin Coin M Inverse Contract Pros and Cons

Pros

  • Low fees
  • You can get lower fees by holding the Kucoin KCS token or increase your spot/futures trading volume

Cons

  • More complicated to calculate profits and losses than linear perpetual contracts and futures

M=Maker, T=Taker

Binance COIN M Inverse Perpetuals and Futures

Binance offers inverse perpetuals and futures. They call the inverse perpetual for COIN-M perpetual and the inverse futures for COIN-M delivery (since they have a settlement day contrary to perpetual contracts). 

Binance COIN-M Contracts Trading Fees

For trading COIN-M contracts, you have to pay

  • Trading fees for opening and closing a contract
  • Funding fees for keeping a contract open
  • Insurance Clearance Fee

Binance COIN-M Contract Pros and Cons

Pros

  • Low fees
  • Get -a 10% discount by paying the crypto futures trading fees with the BNB coin.
  • You can get lower fees by holding the BNB coin.
  • Lower your fees further by using our referral link
  • Many listed COIN M perpetual and standard futures contracts

Cons

  • More complicated to calculate profits and losses than linear perpetual contracts and futures
  • Binance is not very transparent about what jurisdictions can trade futures on their platform.

M=Maker, T=Taker

Crypto Inverse Futures – Questions

What are quote currency and base currency?

The first listed currency of a currency pair is called the base currency, and the second is called the quote currency.

Example: BTC/USDT, BTC is the Base currency, and USDT is the quote currency.

Inverse crypto contracts VS Linear contracts

The difference between inverse futures contracts, coin-margined contracts(COIN-M), is that linear futures contracts are USDT-margined and USDT-settled. In contrast, inverse futures contracts are margined and settled by the underlying cryptocurrency (BTC, ETH etc).

Advantages of Linear Contract

  1. You can use the same settlement coin(USDT) for linear contracts across various futures markets. You don’t have to buy the underlying coins to fund your futures contracts.
  2. It’s easier to calculate your returns in fiat equivalents.

Advantages of Inverse Contract

  1. Since inverse contracts are priced and settled in the underlying cryptocurrency, the profits of Inverse Contracts can contribute to your long-term stack, especially for miners and long-term holders.
  2. You can invest and earn the same cryptos when the price rises via Inverse Contract. Moreover, holding and investing your crypto assets allows you to hedge your positions in the Futures market without converting any of your holdings into USDT (creating a taxable event). 

When is it favorable to trade inverse futures contracts?

If your main goal is to accumulate BTC regardless of its USD price, it’s more convenient to trade inverse futures and have BTC as your base currency for performance tracking reasons. Also, you don’t have to buy and sell BTC for USDT when you buy or sell a futures contract (If you want exposure to BTC between your selling and buying futures contracts).

If you aim to accumulate USD regardless of BTC price, you should consider trading linear USDT perpetual.

Inverse contracts can be useful when you expect prices to increase for an asset. 

Example when an inverse contract is favorable over a linear contract

Assume you have a long ETHUSD inverse contract position. As the prices increase, you will accumulate your profits in ETH.

The USD value of your accumulated ETH will continue to increase with its rising prices. Had you used a linear contract, you would end up with less value in USD than compared to holding ETH at the end of your trade.

Calculation example of an inverse contract

  1. You buy 10.000 BTCUSD inverse contracts at BTC price = 8.000 USD
    (Now you are actually selling 10.000 USD and buying an equivalent value of BTC (10.000/8.000), which is equivalent to 1.25BTC)
  2. You close all contracts at BTC = 12.500 USD (Now, you are buying back 10.000 USD worth of contracts and selling the equivalent value of BTC (10.000/12.500) which equates to 0.8 BTC)
  3. Profit/Loss for a Long position = Beginning Value of Quote Currency (1.25 BTC) – Ending Value of Quote currency (0.8BTC) = 0.45 BTC (0.45BTC*12.500=$5625)
If the contract was settled in USD the profit would have been (1.25*12.500-10.000 = $5625). However, the difference is that you would receive this profit in USD.

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