Up-and-coming crypto derivatives exchange Bybit has announced it is launching a new range of perpetual contracts backed by stablecoin Tether (USDT). The move will mean significantly more flexibility in how traders manage their margin accounts. It comes after the Singaporean exchange has been steadily increasing its market share over the last year, amid a booming market for cryptocurrency futures.
What USDT Contracts Mean for Bybit Users
Before the launch, Bybit’s product range consisted of perpetual contracts where USD was paired with various crypto assets. This meant that users had to deposit the relevant crypto asset into their account to start trading on Bybit, with gains or losses calculated in the underlying asset.
Moving to Tether-based contracts means that users will only need a single account balance in USDT, regardless of the underlying currency of the contract. This gives users many more options in how they manage their positions and corresponding margin. For example, users can open long and short positions concurrently against the same asset as a means of hedging against volatility.
Furthermore, they can deploy profits from a position with one underlying asset to open a second position with a different underlying asset. For instance, a user could open a BTCUSDT contract, and use any profit from that position to open an ETHUSDT contract without having to do any conversion. If the ETHUSDT position starts to incur losses, the trader can simply move profit from the BTCUSDT position to top back up to the required margin. This feature can also be set to run automatically, meaning users can eliminate any danger of liquidation while they’re not actively trading.
What’s Next for Bitcoin?
Bybit’s news comes as the crypto markets are still reeling from the shocking price drops seen in mid-March as a result of global panic over the COVID-19 crisis. In a single day, on March 12, Bitcoin lost around 40% of its value, leading to mass liquidations across the derivatives markets, BitMEX especially.
The drop came as a surprise to many in the cryptocurrency space, as there had previously been a widespread belief that Bitcoin as an asset class is uncorrelated to the rest of the world’s markets. However, as the global stock market also bled out, the crypto markets crashed, illustrating once and for all that during a mass sell-off, even Bitcoin isn’t immune.
The true believers didn’t buy the story, though. On March 16, the US Federal Reserve announced it would be slashing interest rates to zero in an attempt to mitigate the economic damage caused by the coronavirus.
Bitcoin maximalists briefly rejoiced, with Morgan Creek Digital co-founder, Anthony Pompliano, stating via Twitter that the Fed “just ran a $700 billion marketing campaign for Bitcoin.” But while crypto’s biggest asset saw brief gains as a result of the announcement, it was short-lived — about three hours, to be precise.
Over the last weekend, the price of Bitcoin has appeared to stabilize at the $6k mark. How long it will be able to sustain this, particularly if the global stock sell-off continues, will be a matter of watching and waiting.
Image sourced by Pixabay