What are BTC perpetual contract and BCH Perpetual Contract?

BTC or Bitcoin is considered the most famous cryptocurrency on the earth. It is the major cryptocurrency in the world, as well, in terms of trading volumes as well as market capitalization. Traders can margin trade Bitcoin on any Exchange by making use of their derivatives, such as a BTC perpetual contract or a BTC futures contract.

As a decentralized digital currency, it works without a single administrator or a central bank. This means that the bitcoin Peer-to-peer swap can take place without the necessity of any sort of intermediary. Trades have the liberty to trade bitcoin by going short or long with leverage.

BTC perpetual contracts are intended to offer income of the underlying Bitcoin spot market with the additional benefit of leverage. These contracts do not usually have an ending date. Moreover, the contracts are usually quoted in the currency of the United States. This means that all calculations that are pertained to margin, loss, profit, as well as the settlement are denominated in BTC.

The perpetual contracts in bitcoin are margined in BTC, meaning you are required to have BTC to deal with these contracts. The maximum allowable leverage for perpetual contracts in BTC is 100 times of the Underlying Index. The underlying index for these contracts is DEXBTUSD. It is made up of equal weighted average price of BTC/USD from coinbase, bitstamp, and kraken.

When it comes to funding, it is considered a sequence of continuous payments that are swapped between shorts and longs in a perpetual contract. This is done with the intention of keeping the price of the BTC perpetual contract tethered to the basic index.

The funding rate is equal to the difference between the the marked price and the price of the underlying index at any given time. Funding is considered an eight-hourly interest rate, is calculated, and exchange every minute. When the funding rate is encouraging, longs pay shorts. When it is depressing, shorts pay longs.

BCH, which stands for Bitcoin Cash Series, is a derivative. It enables traders to guess on the future value of the Bitcoin swap rate and Bitcoin Cash. Traders do not need to have Bitcoin Cash to buy and sell the BCH futures contract and the BCH Perpetual Contract. This is for the reason that it only needs Bitcoin as margin.

The underlying of BCH future is the BCH/XBT swap rate as recorded in the BBCHXBT Index. The BCH Futures and perpetual contracts are quoted in Bitcoin and all PNL and margin calculations are denominated in Bitcoin.

When it comes to the margin and leverage of the BCH Perpetual Contract, all of them will be posted in Bitcoin. This means that traders will be capable of going short or long the contract exploiting only Bitcoin. The maximum permitted leverage of BCH futures contracts features 20 times of the underlying index. This means that if you are a trader and would like to purchase 10 Bitcoin value of contracts, you will only need 0.5 Bitcoin of preliminary margin. When it comes to settlement, the BCH futures contracts will decide on the .BBCHXBT30M Index Price.

What is an ETH Perpetual Contract?

BitMEX or the Bitcoin Mercantile Exchange is considered the most popular exchange amid traders for trading their Bitcoins. This is for the reason that the exchange is committed to offering BTC Perpetual Contract, which allows 100 times leverage on their perpetual swaps.

A Typical ETH Perpetual Contract refers to a contract for the Ethereum cryptocurrency. Bitcoin derivatives, chiefly perpetual swaps are surging in fame in 2019, with the CME or the Chicago Mercantile Exchange and other Bitcoin derivatives gateways all recording huge volumes during the past few months. These derivatives gateways have drawn a combination of both retail, as well as professional traders, even though current analysis details that, traders on average, do not use the utmost leverage and they have minimum success rates if they do.

An ETH Perpetual Contract is a form of a futures contract for the Ethereum Bitcoin, which is an agreement between two parties to sell or buy Ethereum at an explicit date and price in the future. Futures are a form of derivative, where the value of the agreement is based on the underlying value of the Ethereum cryptocurrency.

However, perpetual ETH swaps are an exceptional form of the futures contract, known as an inverse futures contract. These contracts work in a similar fashion of standard Bitcoin futures contracts, where money-settlement of the Ethereum cryptocurrency can be achieved without delivering the cryptocurrency physically. The major difference is that with inverse futures for the Ethereum cryptocurrency, the resolution of an ETH/USD futures contract will be in Bitcoins, which will be the base currency, rather than being settled in USD.

As a result, the USD is understood as the product in a standard futures market, while ETH stands for the settlement of the contract.  This has numerous benefits for exchanges and strives to duplicate spot markets with overstated leverage.  The two main benefits include:

1. Inverse futures contracts for the Ethereum cryptocurrency facilitate investors to buy and sell the cryptocurrency against fiat pairs devoid of actually having a revelation to the fiat. Such a trade model can avoid several of the regulatory barriers that entail fiat deposits on exchanges and manacle their capability to offer a variety of instruments.

2. Inverse futures for the ETH cryptocurrency are realistic for traders, who are looking for a way to hedge positions in the currency of the United States by opening short positions.

The inverse futures ETH Perpetual Contract is not the complete level of perpetual swaps. The perpetual aspect originates from the solution of BitMEX to a problem among many crypto traders, particularly margin traders, where ending of contracts was steadily problematic.

Ending of a futures contract commences settlement, where the futures price is required to be equal to the spot price of the underlying Ethereum cryptocurrency. When settlement nears, the price of the futures contract is likely to converge on the index price.

At an advanced level, BTC Perpetual Contract for ETH swaps are a fake margin trading tools where a series of everlasting futures contracts include an interest rate that symbolizes the difference between the spot price of the ETH cryptocurrency and the price of the swap contract. This is quoted by making use of the weighted BitMEX index. This will consist of BitStamp, Coinbase Pro, and Kraken XBT/USD prices.