Understanding Reverse Perpetual Contracts
Before diving into reverse perpetual contracts, let's clarify perpetual contracts. These are similar to margin-based asset markets where prices track underlying reference indices without expiration dates. Positions can be held indefinitely unless liquidated.
Reverse contracts (Coin-Margined Contracts) require using the traded cryptocurrency as collateral. For example:
- Trading BTC pairs? Deposit BTC as margin, with profits/losses settled in BTC.
- Trading ETH pairs? Use ETH for margin and settlements.
Key Advantages of Reverse Perpetual Contracts
Bull Market Advantage
When going long with BTC margin on BTC/USDT:- Price increases amplify BTC-denominated gains.
- Price declines magnify BTC-denominated losses.
Thus, coin-margined contracts favor bullish strategies.
- Ideal for Crypto Accumulation
Long-term holders benefit from earning additional coins through both long and short positions, assuming positive price outlooks.
How Reverse Perpetual Contracts Work: Bybit Example
Bybit's USD-quoted contracts calculate profits/losses in the contract's native cryptocurrency (BTC/ETH/XRP/EOS). Each contract represents $1 value, enabling micro-transactions.
Profit Formula for Long Positions: Contract Quantity × (1/Entry Price - 1/Exit Price)
Practical Scenario: BTC/USD Trade
- Entry: Buy 10,000 contracts at $8,000
= Selling $10,000 to buy 1.25 BTC (10,000/8,000) - Exit: Sell at $12,500
= Buying $10,000 worth of contracts with 0.8 BTC (10,000/12,500) - Profit: 1.25 BTC - 0.8 BTC = 0.45 BTC
Leverage and Margin Calculations
Initial margin = Contract Quantity / (Order Price × Leverage).
Example: 100BTC position with 100x leverage requires 1BTC margin.
👉 Maximize your trading potential with Bybit's leveraged contracts
FAQ Section
Q: Can I use USDT for reverse perpetual contracts?
A: No, reverse contracts require the base cryptocurrency (e.g., BTC for BTC/USD pairs).
Q: How does funding work in reverse contracts?
A: Funding fees are exchanged between long/short positions in the settlement coin (BTC/ETH).
Q: Which exchanges offer reverse perpetual contracts?
A: Major platforms like Bybit, OKX, and Binance provide these instruments.
Q: Are reverse contracts riskier than USDT-margined ones?
A: They carry volatility risk in both position and collateral value during crypto price swings.
👉 Start trading with OKX's advanced contract tools today
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