By
Andy Watson
September 28th, 2022
At ‘Bitcoin Bonanza,’ participants will compete for rewards from a $20,000 prize pool.
A healthy financial market is always underscored by a well-oiled derivatives market. When derivatives contracts were first created, they were made to help investors hedge their bets on the spot market. Since then, however, these contracts have been put to use for much more complex market maneuvers, bringing investors a host of advantages.
The cryptocurrency derivatives market has seen explosive growth over the last couple of years. From basic futures and options to the more modern perpetual contracts, digital assets are at the forefront of this financial innovation.
A Bitcoin Bonanza
This month, Phemex, one of the world’s top cryptocurrency derivatives exchanges, is conducting an event to celebrate the launch of its USD-margined BTCUSD contracts. At ‘Bitcoin Bonanza,’ participants will compete for rewards from a $20,000 prize pool. Winners who rank in the top 10 by trading volume will each receive between $200 and $8000 depending on the number of total participants.
After the contest, which will take place between October 28 and November 7, prizes will be distributed based on each participant’s BTCUSD linear contract trading volume. Actions such as registering batch accounts and using APIs for the competition will result in disqualification. It’s important to note that only the USD-margined contract counts toward this event, not the inverse BTCUSD contract (BTC-margined).
USD-margined contracts are all denominated and settled in USD. Unlike traditional futures, these contracts have no expiration date. Instead, they ask long position holders to pay a fee to short position holders (or vice versa) every eight hours based on whether the contract is trading above or below the spot price. This also means that traders won’t have to keep track of specific dates and delivery months, and can maintain their positions over extended periods.
Additionally, USD-margined contracts are more intuitive for newer traders entering the derivatives market since the contracts are denominated in USD. This also makes it much easier to calculate returns. USD acts as a versatile settlement currency due to the wide range of USD-margined products available. The added flexibility of a universal settlement currency also means traders won’t have to buy any particular asset to fund a futures position, and it helps reduce currency conversion fees.
The Future of Futures
USD-Margined contracts are also more attractive for more risk-averse investors, especially during periods of high volatility. Since they’re denominated in US dollars, traders don’t need to worry about hedging their exposure to the underlying asset’s markets. The digital assets industry knows volatility all too well, with Bitcoin rising and falling by up to 15% on the regular. USD-Margined contracts require less intense risk controls than contracts margined by cryptocurrencies.
Furthermore, with BTC-Margined contracts, a $1000 rise in price doesn’t necessarily translate to an equivalent increase in BTC profits, especially at higher prices. However, with Phemex’s linear USD-Margined Bitcoin contracts, traders can enjoy profit scaling while also being able to more easily track their portfolios and make decisions based on the USD value of their holdings.
This June, global derivatives trading volume for cryptocurrencies surpassed the spot market, with some of the world’s largest financial institutions starting to take notice of the asset class. From connecting investors to otherwise inaccessible investments to aiding in asset price discovery, Phemex provides all kinds of crypto-related benefits through its trading platform.
