are incurred, which correlate with the market's underlying trend. Funding fees may also increase when the market is in highly bullish territory, as traders are willing to pay higher fees to go long on a futures contract.
On the contrary, quarterly contracts don’t carry a fee when held for one to three months, making these trades more wallet-friendly and easier to manage and allowing investors to trade on a lower-cost basis. Despite all the benefits that COIN-Margined contracts, HODLers must approach these financial instruments with caution. The high levels of volatility in the cryptocurrency market can affect the purchasing power of the collateral you have allocated for trading.
For instance, Bitcoin entered a four-month downtrend after reaching nearly $70,000 in November 2021. Long-term investors saw the value of their BTC holdings fall by more than 50% throughout this period. Such drastic trend changes in the crypto markets make it crucial for traders to be careful when trading COIN-Margined contracts.USDⓈ-Margined contracts are crypto derivatives quoted and settled in USDT, BUSD or USDC.
Traders prefer to trade USDⓈ-Margined contracts because there’s no need to worry about cryptos being bullish, bearish or stagnant. Short-selling enables traders to sell high and buy low to profit from the price difference,. Meanwhile, leverage can result in significant gains from small price fluctuations.quickly to benefit from potential setups they have identified.
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