The cryptocurrency trading landscape has rapidly evolved, with innovative exchanges like Bitget offering advanced features that allow traders to maximize their strategies and manage risks.
One of Bitget’s unique features is its USDT-M Futures in Multi-Asset Mode, a flexible trading mode that offers the ability to trade multiple cryptocurrencies with cross-margining options. This glossary aims to clarify the key terms and concepts associated with Bitget USDT-M Futures and the Multi-Asset Mode to help users navigate this advanced trading setup effectively.
1. Bitget USDT-M Futures
1.1 What Are USDT-M Futures?
USDT-M Futures (USDT-Margined Futures) are futures contracts where Tether (USDT) is used as the margin and settlement currency. In USDT-M futures, all profits and losses are settled in USDT, regardless of the cryptocurrency being traded. This contrasts with Coin-M futures, where the underlying asset is used for margin and settlement.
1.2 Perpetual vs. Delivery Contracts
- Perpetual Futures Contracts: These are futures contracts with no expiration date. Traders can hold their positions indefinitely, paying or receiving funding fees to keep their position open.
- Delivery Contracts: These contracts have a set expiration date, and positions are settled based on the underlying asset’s price at that time.
2. Multi-Asset Mode
2.1 What is Multi-Asset Mode?
Multi-Asset Mode is an advanced feature on Bitget that allows traders to use multiple cryptocurrencies as margin collateral for trading USDT-M Futures. In this mode, a trader can hold a variety of assets like BTC, ETH, and others as collateral, giving flexibility and more efficient use of capital.
2.2 Cross-Asset Margining
In Multi-Asset Mode, Cross-Asset Margining enables the balance of multiple assets in a trader’s account to be considered as collateral, enhancing capital efficiency. This differs from Single-Asset Mode, where each asset must be managed independently for margin.
3. Key Terms for Bitget USDT-M Futures in Multi-Asset Mode
3.1 Initial Margin (IM)
The Initial Margin (IM) is the minimum amount of collateral a trader needs to open a position. In Multi-Asset Mode, traders can use various assets to meet this requirement, as long as the combined value of the assets equals or exceeds the required margin.
3.2 Maintenance Margin (MM)
The Maintenance Margin (MM) is the minimum amount of margin that must be maintained in a position to prevent liquidation. If the margin falls below this level, Bitget will liquidate the position to prevent further losses.
3.3 Leverage
Leverage allows traders to control a larger position with a smaller amount of capital. In USDT-M Futures, traders can apply leverage to multiply their buying power. However, in Multi-Asset Mode, the leverage is applied to the total value of assets held as collateral.
3.4 Margin Ratio
The Margin Ratio is a key risk metric that measures the proportion of your margin balance to your total position value. If the margin ratio reaches a critical threshold, typically 100%, liquidation may be triggered. Traders in Multi-Asset Mode must monitor this closely as their margin involves multiple cryptocurrencies.
3.5 Liquidation Price
The Liquidation Price is the price at which your position will be automatically closed due to insufficient margin. Since Multi-Asset Mode uses multiple assets as collateral, fluctuations in any one of those assets’ prices can affect the liquidation price.
3.6 Funding Rate
The Funding Rate is the periodic fee exchanged between long and short traders to maintain the price of perpetual contracts close to the spot price. In Multi-Asset Mode, your funding payments or receipts will still be settled in USDT, even if you are using multiple assets as collateral.
3.7 Unrealized and Realized PnL
- Unrealized Profit and Loss (PnL): This refers to the profit or loss on open positions. It fluctuates with market movements.
- Realized PnL: This is the actual profit or loss realized when a position is closed.
In Multi-Asset Mode, PnL calculations are still done in USDT, even if multiple assets are being used for margin.
4. Multi-Asset Collateral Management
4.1 Collateral Conversion
In Multi-Asset Mode, the collateral’s value is constantly changing based on the market prices of the cryptocurrencies being used. Bitget provides a collateral conversion tool, which automatically converts non-USDT assets into a notional USDT value for margin purposes.
4.2 Collateral Haircut
Bitget applies a collateral haircut to some assets, meaning only a portion of the asset’s value is considered when calculating the margin. For example, if a collateral haircut of 30% is applied to BTC, only 70% of its value is counted as margin.
4.3 Asset-to-Margin Conversion
Each asset used in Multi-Asset Mode is converted into its USDT equivalent. This process ensures that all trades are executed and settled in USDT, regardless of the underlying collateral’s nature.
5. Risk Management in Multi-Asset Mode
5.1 Volatility Risk
Using multiple assets as collateral introduces volatility risk. While it increases flexibility, a sharp drop in the value of any collateral can reduce the overall margin, increasing the risk of liquidation. Therefore, it’s important for traders to closely monitor the value of their entire asset portfolio.
5.2 Auto-Reduction Mechanism (ARM)
Bitget utilizes an Auto-Reduction Mechanism (ARM) in case of extreme market conditions. If a trader’s position cannot be liquidated in a regular manner due to extreme volatility, ARM reduces the position gradually while offsetting the counterparties’ risk.
6. How to Enable Multi-Asset Mode on Bitget
6.1 Steps to Activate Multi-Asset Mode
- Log in to your Bitget account.
- Navigate to the Futures tab.
- Select Multi-Asset Mode under the account settings.
- Review and agree to the terms, then confirm to activate the mode.
6.2 Transferring Assets into Multi-Asset Mode
Once the mode is activated, you can deposit various assets into your account. These assets will automatically be counted as collateral for your futures trading, with their value being converted to USDT for margin purposes.