Estonia-based Bibox exchange is to launch bitcoin cash (BCH) and litecoin (LTC) perpetual trading contracts on April 12, with leverage of up to 50x. Priced in tether (USDT) – the US dollar-pegged stablecoin – the cryptocurrency derivatives are targeted at both institutional and retail investors.
Perpetuals With No Funding Rate
Unlike futures, perpetuals do not expire, meaning they are often viewed as a better hedge against price drops. However, both contracts represent an agreement to purchase an asset, in this case BCH, at a pre-determined price.
Bihui Lin, spokeswoman for Bibox, told news.Bitcoin.com that the contracts do not have a funding rate, meaning less cost for those involved in the trade. Normally, for contracts trading, investors have to pay the funding rate every eight hours depending on market conditions – sometimes it’s received or paid by users on long positions to those who are short and vice-versa.
“The roll-out of perpetual contract is not only a significant step forward for Bibox’s ecological layout, but also a promise that we will continue creating a transparent, secure and user-friendly trading environment for our users,” Lin said in an interview. “Also, during the bear market, derivatives are a good investment tool as an alternative for users,” she added.
Currently, Bibox has perpetuals open for BTC, ETH, and EOS, all paired against tether. In the last 24 hours, trading volume for the exchange’s contracts amounted to 459 million USDT. According to Lin, the bitcoin cash contracts will be bought or sold based on the weighted-average spot price of five crypto exchanges, namely Bibox, Binance, Bitfinex, Huobi, and Okex.
Crypto Derivatives Market Growing
On trading the contracts against tether, Lin explained that Bibox considered the stablecoin as the most liquid and highest volume asset in the market at the moment. “Using USDT as margin – it’s more transparent and simple for users, and easy to calculate the profit and loss,” she stated.
Derivatives, such as tradable indices and futures, are considered by some as useful for hedging as well as for leveraging trading profits. A growing number of companies have started (or are planning) to offer digital currency derivatives to both institutional and individual investors, as the industry continues to grow.
Exchanges such as Intercontinental Exchange Inc., which owns the New York Stock Exchange, and Chicago-based Eris Exchange, have revealed plans to introduce physically delivered futures for BTC following in the footsteps on Coinflex, which has already done so.
Bibox is an Estonia-based crypto exchange with operation centers in the U.S., Switzerland, Canada, China, South Korea, Japan, Singapore, and Vietnam.
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