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<p>In recent years, the gaming world has experienced a revolutionary shift with the advent of GameFi. Combining the thrill of gaming with the financial rewards of decentralized finance (DeFi), GameFi offers players a unique opportunity to play and earn. But what exactly is GameFi, and how does it work?</p>



<p>In this comprehensive guide, we’ll explore the ins and outs of the GameFi ecosystem. We’ll start by defining what GameFi is and how it operates. From there, we’ll discuss the advantages of engaging with GameFi platforms, including the potential for financial gain. We’ll also provide practical tips on how to get started, including ways to maximize your earnings while playing.</p>



<p>However, it’s not all fun and games &#8211; understanding the associated risks is equally important. We’ll cover the potential pitfalls you need to be aware of to make informed decisions. Finally, we’ll look ahead to the future of GameFi, examining emerging trends and what they mean for gamers and investors alike.</p>



<p>Whether you&#8217;re a seasoned gamer, a crypto enthusiast, or someone curious about this burgeoning space, this guide is designed to give you a thorough understanding of GameFi and its exciting possibilities. Let&#8217;s dive in!</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/34966706445081" alt="gamefi-1.jpg"/></figure>



<h3 class="wp-block-heading" id="h_01J2JJWNFB0B2ZFS73ZHF2FBER">Table of Contents:</h3>



<p><a href="#h2-1">What Is GameFi?</a></p>



<p><a href="#h2-2">How Does GameFi Work?</a></p>



<p><a href="#h2-3">What Are The Advantages of GameFi?</a></p>



<p><a href="#h2-4">How to Play and Earn with GameFi?</a></p>



<p><a href="#h2-5">What Are The Risks of GameFi?</a></p>



<p><a href="#h2-6">The Future of GameFi</a></p>



<h2 class="wp-block-heading" id="h2-1">What Is GameFi?</h2>



<p>GameFi, a blend of “game” and “finance,” is revolutionizing the gaming industry by merging blockchain technology with decentralized finance (DeFi). This innovative concept allows players to earn real-world value through in-game activities. Unlike traditional video games, where in-game assets are controlled by the developers, GameFi uses blockchain to enable true ownership of digital assets. Players can trade, sell, or utilize these assets across different platforms, creating a new economy within the gaming ecosystem. By leveraging cryptocurrencies and NFTs (Non-Fungible Tokens), GameFi not only enhances the gaming experience but also provides monetary incentives, turning gaming into a potentially profitable venture.</p>



<p>Here&#8217;s a detailed look at the key components and concepts within GameFi:</p>



<p>1. Play-to-Earn (P2E):</p>



<ul class="wp-block-list">
<li>Players can earn cryptocurrency or in-game assets with real-world value through gameplay.</li>



<li>Unlike traditional games, where in-game assets and currency have no value outside the game, GameFi enables players to convert their in-game earnings into real money.</li>
</ul>



<p>2. Non-Fungible Tokens (NFTs):</p>



<ul class="wp-block-list">
<li>In-game assets, such as characters, items, and land, are often represented as NFTs.</li>



<li>These NFTs can be bought, sold, and traded on various marketplaces, giving players true ownership and the ability to profit from their in-game activities.</li>
</ul>



<p>3. Decentralized Finance (DeFi) Integration:</p>



<ul class="wp-block-list">
<li>GameFi projects often incorporate DeFi elements such as staking, liquidity mining, and yield farming.</li>



<li>Players can stake their in-game tokens or NFTs to earn additional rewards, or participate in liquidity pools to earn a share of transaction fees.</li>
</ul>



<p>4. Blockchain Technology:</p>



<ul class="wp-block-list">
<li>GameFi platforms are built on blockchain networks, ensuring transparency, security, and decentralization.</li>



<li>Popular blockchains for GameFi projects include Ethereum, Binance Smart Chain, and Solana.</li>
</ul>



<p>5. Governance Tokens:</p>



<ul class="wp-block-list">
<li>Some GameFi projects issue governance tokens, giving players the ability to vote on game development decisions and changes to the ecosystem.</li>



<li>This creates a more community-driven and decentralized approach to game development.</li>
</ul>



<p>6. Interoperability:</p>



<ul class="wp-block-list">
<li>GameFi aims to create interoperable ecosystems where assets and tokens can be used across different games and platforms.</li>



<li>This contrasts with traditional games where assets are confined to a single game.</li>
</ul>



<h2 class="wp-block-heading" id="h2-2">How Does GameFi Work?</h2>



<p><strong>Blockchain Infrastructure:&nbsp;</strong>GameFi platforms are built on blockchain networks like Ethereum, Binance Smart Chain, Solana, or others. These blockchains provide the underlying technology for decentralization, security, and transparency. Smart contracts are used to automate and enforce the rules of the game, manage transactions, and handle the distribution of rewards. These self-executing contracts ensure that transactions and game mechanics are transparent and immutable.</p>



<p><strong>Non-Fungible Tokens (NFTs):&nbsp;</strong>Items such as characters, weapons, skins, and virtual land are represented as NFTs. Each NFT is unique and can be owned, traded, or sold by players. NFTs provide true ownership of in-game assets, which can be verified on the blockchain. The scarcity and uniqueness of NFTs contribute to their value.</p>



<p><strong>Play-to-Earn (P2E) Mechanics:&nbsp;</strong>Players can earn cryptocurrency or NFTs by completing tasks, winning battles, or achieving milestones in the game. These rewards can be traded on marketplaces or used within the game. Some games allow players to stake their in-game tokens or NFTs to earn additional rewards. Yield farming involves providing liquidity to decentralized exchanges (DEXs) in exchange for a share of the transaction fees or other rewards.</p>



<p><strong>DeFi Integration:&nbsp;</strong>GameFi platforms may offer liquidity pools where players can deposit their tokens to provide liquidity for trading pairs. In return, players earn a portion of the trading fees. Players can earn or purchase governance tokens that give them voting rights on game development decisions, policy changes, and other aspects of the game’s ecosystem.</p>



<p><strong>Marketplaces:&nbsp;</strong>Players can buy, sell, and trade NFTs and in-game tokens on various marketplaces. These transactions are facilitated by smart contracts, ensuring security and transparency. Some GameFi projects aim to create interoperable ecosystems where assets can be used across multiple games or platforms, increasing their utility and value.</p>



<p><strong>Game Economy:&nbsp;</strong>The economic model of a GameFi platform, often referred to as tokenomics, defines how tokens are distributed, earned, and burned. A well-designed tokenomics model ensures a sustainable economy and incentivizes player engagement. Many GameFi platforms have their own in-game currency, which players can earn and use to purchase items, pay for services, or participate in special events.</p>



<p><strong>Security and Fair Play:&nbsp;</strong>To ensure fair play, GameFi platforms often implement anti-cheat mechanisms and use the transparency of blockchain to monitor and prevent fraudulent activities. Regular security audits of smart contracts and the overall platform help protect against vulnerabilities and hacks.</p>



<h2 class="wp-block-heading" id="h2-3">What Are The Advantages of GameFi?</h2>



<p>One of the most compelling features of GameFi is the Play-to-Earn model. Unlike traditional games where players often spend money without any financial return, P2E allows gamers to earn real-world value. Players can earn cryptocurrency or NFTs (Non-Fungible Tokens) as rewards for completing tasks or winning battles. Game assets are tokenized, giving players true ownership and the ability to trade, sell, or rent these assets within and outside the game ecosystem.</p>



<p>GameFi leverages blockchain technology, which ensures transparency and decentralization. Blockchain technology ensures that all transactions and game mechanics are transparent and tamper-proof, leading to fair and trustless gameplay. Many GameFi projects operate on decentralized platforms, allowing players and stakeholders to have a say in game development and updates through governance tokens.</p>



<p>Developers can also reap significant benefits from the GameFi ecosystem. Through Initial Game Offerings (IGOs), developers can raise funds directly from the community, reducing reliance on traditional financing methods. Developers can earn a percentage from every transaction or trade made within their game, creating continuous revenue streams.</p>



<p>GameFi introduces a new level of engagement and immersion. Players can use their assets across multiple games and platforms, enhancing the overall gaming experience. Ongoing updates and community-driven enhancements keep the game fresh and engaging.</p>



<p>GameFi opens up financial opportunities for a wider audience. People from regions with limited economic opportunities can earn through gaming, providing a new avenue for income. Many GameFi platforms allow users to start playing and earning with minimal initial investment.</p>



<p>The GameFi ecosystem fosters strong communities. Many games encourage collaboration and teamwork, fostering stronger community bonds. Communities centered around shared gaming interests can drive greater engagement and loyalty.</p>



<h2 class="wp-block-heading" id="h2-4">How to Play and Earn with GameFi?</h2>



<p><strong>Step 1: Choose a GameFi Platform</strong></p>



<ul class="wp-block-list">
<li>Start by selecting a GameFi platform that aligns with your interests. Popular platforms include Axie Infinity, Decentraland, and The Sandbox. Each offers unique gameplay mechanics and earning opportunities.</li>
</ul>



<p><strong>Step 2: Set Up a Wallet</strong></p>



<ul class="wp-block-list">
<li>To participate in GameFi, you need a digital wallet that supports cryptocurrency transactions. MetaMask and Trust Wallet are popular choices. These wallets will store your in-game earnings and assets.</li>
</ul>



<p><strong>Step 3: Purchase Initial Assets</strong></p>



<ul class="wp-block-list">
<li>Most GameFi games require an initial investment in the form of NFTs or tokens. For example, to start playing Axie Infinity, you&#8217;ll need to buy Axies—digital creatures used within the game. Use your wallet to purchase these assets from marketplaces like OpenSea.</li>
</ul>



<p><strong>Step 4: Learn the Game Mechanics</strong></p>



<ul class="wp-block-list">
<li>Spend some time understanding the gameplay and earning mechanics. Each game has unique rules and strategies. For instance, in Axie Infinity, players earn through battles, breeding Axies, and completing adventures.</li>
</ul>



<p><strong>Step 5: Participate and Earn</strong></p>



<ul class="wp-block-list">
<li>Play: Engage in various in-game activities such as completing quests, battling other players, or building and trading assets.</li>



<li>Earn: Depending on the game, you can earn in-game currency, NFTs, or both. These can often be traded for other cryptocurrencies or sold on marketplaces.</li>



<li>Staking and Yield Farming: Some GameFi platforms offer additional earning opportunities through staking and yield farming, where you can earn rewards by locking up your assets.</li>
</ul>



<p><strong>Tips for Maximizing Earnings</strong></p>



<ul class="wp-block-list">
<li>Stay Informed: Follow game updates and community forums to stay ahead of new earning opportunities and strategies.</li>



<li>Diversify Your Assets: Don’t put all your eggs in one basket. Spread your investments across different games and assets to mitigate risks.</li>



<li>Engage with the Community: Join Discord channels, Reddit forums, and other communities related to your game. Networking can provide valuable insights and tips.</li>



<li>Regularly Monitor the Market: Keep an eye on the value of your in-game assets and cryptocurrencies. The market can be volatile, and timing your trades can maximize your earnings.</li>
</ul>



<h2 class="wp-block-heading" id="h2-5">What Are The Risks of GameFi?</h2>



<p><strong>Financial Risks:&nbsp;</strong>Tokens earned in GameFi platforms can be highly volatile. Their value can fluctuate wildly, influenced by market speculation, changes in player base, and broader cryptocurrency market trends. This volatility can lead to significant financial losses if the value of the tokens decreases sharply. The decentralized nature of GameFi makes it a fertile ground for fraud and scams. Unverified projects may lure users with promises of high returns, only to disappear with their investments. It’s crucial to conduct thorough research and due diligence before investing in any GameFi platform.</p>



<p><strong>Security Risks:&nbsp;</strong>GameFi platforms often rely on smart contracts to execute transactions and manage in-game economies. However, these contracts can have vulnerabilities or bugs that hackers can exploit, potentially leading to the loss of assets. Both centralized servers and decentralized systems can be targets for cyber-attacks. Hacks and data breaches can compromise user information, steal assets, and disrupt gameplay, causing both financial and personal distress.</p>



<p><strong>Operational Risks:</strong>&nbsp;Many GameFi platforms rely on continuous user growth to sustain their economies. If the player base declines or if the game fails to attract new users, the in-game economy can collapse, rendering assets worthless. Technical issues such as server downtimes, bugs, and poor user interface can hamper the gaming experience and lead to loss of interest among players. Ensuring robust technical infrastructure is critical for the success and reliability of any GameFi platform.</p>



<p><strong>Social Risks:</strong>&nbsp;The blend of gaming and finance can create an addictive environment, particularly when real money is involved. The thrill of earning and the fear of missing out can lead to compulsive behaviors similar to gambling addiction. GameFi platforms often have strong community elements. Toxic behavior, harassment, and other negative social interactions can diminish the gaming experience and lead to mental health issues for some players.</p>



<h2 class="wp-block-heading" id="h2-6">The Future of GameFi</h2>



<h3 class="wp-block-heading" id="h_01J2JK76RQ3GRBXKT16FTVTX5D">Enhanced Immersive Experiences</h3>



<p>The next generation of GameFi will likely prioritize immersive experiences. With advancements in virtual reality (VR) and augmented reality (AR), players could soon find themselves in more lifelike, interactive environments that make the gaming experience more engaging and rewarding.</p>



<h3 class="wp-block-heading" id="h_01J2JK7D1W0Y6CFC2AFQK18WRF">Interoperability and Cross-Platform Play</h3>



<p>Imagine carrying your favorite sword from one game into another entirely different game. Interoperability between different GameFi platforms and traditional games could become a reality, thanks to blockchain technology. This would allow for greater asset utility and player freedom, making the gaming ecosystem more interconnected than ever.</p>



<h3 class="wp-block-heading" id="h_01J2JK86599M022VDPJSPD9SVE">Sustainable Play-to-Earn Models</h3>



<p>While the play-to-earn model has been revolutionary, it faces sustainability challenges. Future GameFi projects will need to create more balanced economic systems to ensure long-term viability. This could involve incorporating DeFi elements like staking and yield farming to create additional revenue streams for players and developers alike.</p>



<h3 class="wp-block-heading" id="h_01J2JK8DAAHX208M0FWQJVP0GN">Enhanced Security Measures</h3>



<p>Security will become increasingly crucial as GameFi attracts more users and higher stakes. Future platforms will focus on robust security protocols to protect users from hacks, scams, and fraud, ensuring a safer gaming environment.</p>



<h3 class="wp-block-heading" id="h_01J2JK8MRJD1QVNPCM3YC3GF22">AI and Machine Learning Integration</h3>



<p>Artificial intelligence (AI) and machine learning could significantly impact GameFi. From creating smarter in-game characters to providing personalized gaming experiences based on player behavior, these technologies offer endless possibilities for enhancing gameplay.</p>



<h3 class="wp-block-heading" id="h_01J2JK91SQ8SRC8VYNT3XX92NH">Regulatory Developments</h3>



<p>As GameFi grows, it will undoubtedly attract regulatory scrutiny. Future developments in the sector will need to consider compliance with international laws and regulations to ensure sustainable growth and mainstream acceptance.</p>



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<h3 class="wp-block-heading" id="h_01J2JK97DZ64N29W4GEVESYKNE">About XT.COM</h3>



<p>Founded in 2018,<a href="http://www.xt.com/en">&nbsp;XT.COM</a>&nbsp;now serves nearly 8 million registered users, over 1,000,000+ monthly active users and 40+ million users in the ecosystem. Our comprehensive trading platform supports 800+ high-quality tokens and 1000+ trading pairs. XT.COM<a href="https://www.xt.com/en">&nbsp;crypto exchange</a>&nbsp;supports a rich variety of trading, such as<a href="https://www.xt.com/en/trade/btc_usdt">&nbsp;spot trading</a>,<a href="https://www.xt.com/en/trade/btc_usdt?type=margin">&nbsp;margin trading</a>, and<a href="https://www.xt.com/en/futures">&nbsp;futures trading</a>&nbsp;together with an aggregated<a href="https://www.xt.com/en/nft">&nbsp;NFT marketplace</a>. Our platform strives to cater to our large user base by providing a secure, trusted and intuitive trading experience.</p>


What Is GameFi? A Comprehensive Guide to the GameFi Ecosystem


<p>In the continuous evolution of the digital landscape, Bitcoin remains a cornerstone, captivating with its decentralized charm and unmistakable flair for innovation. Among its latest intrigues are ‘Ordinals,’ a term that has been lighting up crypto forums and social media with both excitement and a touch of mystery.</p>



<p>But what precisely are Ordinals? Many are familiar with the concept of non-fungible tokens (NFTs) on Ethereum and other blockchains, yet Bitcoin, with its script-focused and no-frills design, had long abstained from such tokenized fanfare. That is, until now. ‘Bitcoin Inscriptions’ or ‘Ordinals’ now emerge as a novel concept, rewriting the narrative of what’s possible on Bitcoin’s blockchain.</p>



<p>In this article, we’ll delve deep into the world of Bitcoin Ordinals, exploring every crevice of this new phenomenon. From the basic principles of what Ordinals are, to the implications they hold for the future of digital artifact inscription on the Bitcoin blockchain, we are set to unravel the layers of this fascinating new development.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/28337611205273" alt="bitcoin-inscription-1.jpg"/></figure>



<h3 class="wp-block-heading" id="h_01HNMP62D5N7C4C79TJS95FNQQ">Table of Contents:</h3>



<p><a href="#h2-1">What is the bitcoin inscription?</a></p>



<p><a href="#h2-2">How does bitcoin inscription work?</a></p>



<p><a href="#h2-3">What are Ordinals?</a></p>



<p><a href="#h2-4">History of ordinals development</a></p>



<p><a href="#h2-5">How are Bitcoin Ordinals different from NFTs?</a></p>



<p><a href="#h2-6">Types of Ordinals</a></p>



<p><a href="#h2-7">Benefits and use cases of Ordinals</a></p>



<p><a href="#h2-8">Common challenges and risks</a></p>



<h2 class="wp-block-heading" id="h2-1">What is the bitcoin inscription?</h2>



<p>At its core, a Bitcoin Inscription is a method of embedding data within Bitcoin transactions. This data is immutable, meaning once it’s written into the blockchain, it cannot be altered or removed &#8211; a digital time capsule of sorts within the world’s most well-known cryptocurrency.</p>



<p>With the immutable nature of Bitcoin Inscriptions, they provide a unique opportunity to immortalize information on the blockchain. These inscriptions can include text, images, and even more complex data types. Each entry becomes a permanent part of the Bitcoin network’s history, providing a decentralized and censorship-resistant platform for storing data.</p>



<p>This functionality extends Bitcoin’s applications well beyond just a currency, as it offers a means for creators, individuals, and organizations to make their mark within the digital ledger. Bitcoin Inscriptions turn every transaction into a potential carrier of meaningful and lasting information, fostering an innovative environment for digital expression and data preservation.</p>



<h2 class="wp-block-heading" id="h2-2">How does bitcoin inscription work?</h2>



<p>Inscriptions within Bitcoin transactions can store various types of data, offering value in terms of data preservation and uniqueness. These inscriptions can mark a transaction with a significant piece of information, from simple messages to more complex data.</p>



<p>The accessibility of Bitcoin Inscriptions cannot be overstated; they empower users to leave a permanent imprint on the blockchain. The data is inscribed directly into a satoshi, which is the smallest unit of the Bitcoin currency, much like how authors inscribe first editions or artists sign their works. This ‘digital autograph’ brings a personal touch to the blockchain and, essentially, democratizes the act of making history. Users now have the platform to record anything from intellectual property to moments of personal significance, all within the framework of a secure and enduring ledger.</p>



<p>As Bitcoin continues to permeate various aspects of our digital lives, the implications of Bitcoin Inscriptions will likely become more profound. They offer a distinct blend of art, memory, and technology &#8211; preserving the threads of our digital discourse and serving as milestones in the tapestry of blockchain’s expansive narrative. This metamorphosis of data storage challenges traditional concepts of ownership and legacy, fostering a new culture of digital permanence.</p>



<p>Reflecting on the sensational growth of Bitcoin Inscriptions, it’s important to consider the implications for blockchain space utilization. As more data is immortalized on the Bitcoin blockchain through inscriptions, concerns arise over the potential strain on the network’s capacity. This raises critical questions about the blockchain’s ability to sustain an ever-increasing load of non-financial data, whether the current infrastructure can accommodate such growth, and if not, what innovations will be required to facilitate this expansion. It’s a dialogue between scalability and permanence, where the ideological underpinnings of a decentralized ledger meet the pragmatic challenges of a system built upon limited resources. As the community continues to push the boundaries of Bitcoin’s capabilities, it’s clear that the dialogue around blockchain scalability and functionality is far from over.</p>



<h2 class="wp-block-heading" id="h2-3">What are Ordinals?</h2>



<p>Ordinals, within the Bitcoin milieu, refer to numerical values that are uniquely attributed to specific satoshis, which are the smallest units of Bitcoin (BTC). Think of it as a serial number for every fraction of a Bitcoin, giving each piece a particular identity that can be tracked and referenced on the blockchain.</p>



<p>In traditional financial systems, currency units are interchangeable and indistinguishable. However, ordinals introduce a sense of individuality to each satoshi, allowing for a high level of traceability and adding a new layer of functional intricacy to Bitcoin transactions.</p>



<p>The concept of ordinals is intrinsically linked to the nature of Bitcoin as a digital currency. Unlike fiat money, which treats each unit as interchangeable, ordinals highlight the unique digital existence of each satoshi. By distinguishing individual satoshis through ordinal numbers, users gain the ability to assign specific characteristics or data to a particular unit of value within the Bitcoin network.</p>



<p>This approach paves the way for a new form of digital assets &#8211; one where every satoshi has the potential to carry its own distinct identity and history. This uniqueness can transform satoshis into collectibles, akin to rare coins or unique artworks in the physical world, each with its own story and value. As the crypto-community begins to embrace the significance of individual satoshis, we may witness the emergence of a novel market for these uniquely inscribed digital tokens.</p>



<h2 class="wp-block-heading" id="h2-4">History of ordinals development</h2>



<p>Ordinals have their roots in early Bitcoin functionality but have since taken on greater significance with the introduction of inscription capabilities.</p>



<p>The gradual sophistication of ordinals has led to an increase in their visibility and utility within the Bitcoin ecosystem. Originally serving as markers or reference points, ordinals have transitioned toward becoming a cornerstone for various innovative applications. One remarkable shift has been their use in tokenized artwork, where the uniqueness of a satoshi can embody the digital rarity and ownership of a piece of art. This digital provenance afforded by ordinals not only ensures authenticity but also allows for a new dimension of interaction between the creator and the collector. As the technology matures, we might see more intricate uses, such as in digital identities, property rights management, and even in enhancing the granularity of smart contracts. This evolution of ordinals represents a growing acknowledgment of Bitcoin not just as a currency, but as a foundational layer for a new generation of internet protocols and digital interactions.</p>



<p>The dynamic nature of Bitcoin ordinals also introduces an intriguing dimension of scarcity to the digital realm. Just as traditional artists can release limited edition prints or cast a finite number of sculptures, Bitcoin artisans can limit the circulation of inscribed satoshis. This scarcity can endow these digital objects with a rarity that is meticulously documented and verifiable, attracting collectors and investors alike. In essence, the Bitcoin network could emerge as a grand ledger of digital collectibles, providing a secure and transparent provenance trail. Moving beyond collectibles, ordinals could underpin various novel use cases, such as enabling unique digital experiences or ushering in an era of satoshi-based microtransactions. This developing paradigm heralds a rethinking of digital ownership and the concept of value in a world where the digital and physical increasingly converge.</p>



<h2 class="wp-block-heading" id="h2-5">How are Bitcoin Ordinals different from NFTs?</h2>



<p>Ordinals, by anchoring uniqueness to each satoshi, differentiate themselves from NFTs (non-fungible tokens) which are typically hosted on alternative blockchains like Ethereum. The implications for collectability and ownership tracking are profound.</p>



<p>While NFTs function primarily as certificates of ownership for digital assets, Bitcoin ordinals embed the asset’s essence within the blockchain, creating a more direct and intrinsic connection. This intrinsic linking carries the potential to alter perceptions of value and rarity in the digital space. With each satoshi being identifiably unique and immutable, the possibility for one-to-one correlations between the digital and physical worlds becomes more tangible. Collectors can acquire digital items that hold as much distinction as a rare physical object, and artists can ensure their creations maintain an unbreakable bond to their origins. As we observe the landscape of digital art and collectibles evolve, the role of Bitcoin ordinals in providing a stable and unalterable provenance is likely to become even more significant. This carving out of identity and ownership within the immutable layers of Bitcoin indicates not just a new chapter for the art world, but a blueprint for the future of digital property as a whole.</p>



<p>With their ability to embed a digital asset directly within Bitcoin’s blockchain, ordinals are not just transforming the concept of ownership but are also offering a boon to digital conservationists. The permanence provided by the blockchain ensures that digital arts and collectibles encapsulate perpetuity, standing the test of time in a way that surpasses even physical artifacts. These unique digital assets are impervious to decay, loss, or destruction, which often plagues tangible collectibles, making them an attractive proposition for both preservationists and collectors.</p>



<h2 class="wp-block-heading" id="h2-6">Types of Ordinals</h2>



<p>Inscriptions in Bitcoin come in various forms, which determine the way ordinals are managed and utilized. Here are the primary types:</p>



<ul class="wp-block-list">
<li>Public Key Hash (PKH): A shortened version of a public key that uses hashing for an extra layer of security.</li>



<li>Script Hash (SH): Allows users to lock funds to a script rather than a public key.</li>



<li>Witness Public Key Hash (WPKH): An abbreviated form of the PKH used in SegWit Bitcoin transactions for better data management and reduced fees.</li>



<li>Witness Script Hash (WSH): Similar to WPKH, this is utilized for script-based transactions within the SegWit structure.</li>
</ul>



<h2 class="wp-block-heading" id="h2-7">Benefits and use cases of Ordinals</h2>



<p>These distinctive inscriptions carry a host of advantages that extend beyond simple transaction tracking:</p>



<ul class="wp-block-list">
<li>Improved Security and Privacy: Ordinals can help mask the details of a transaction, providing an additional privacy layer by abstracting the association between transaction histories and public addresses.</li>



<li>Scalability Solutions: With increased scrutiny on Bitcoin’s ability to handle a vast number of transactions, ordinals offer potential pathways to scalability through methods that minimize the data required for verification.</li>



<li>Lightning Network Integration: The utilization of ordinals dovetails nicely with secondary-layer solutions like the Lightning Network, which aims to facilitate faster and more cost-effective Bitcoin transactions.</li>
</ul>



<p>In addition to the technical underpinnings and benefits, the cultural implications of ordinals are equally noteworthy. By allowing artists and creators to mint original works directly onto Bitcoin’s blockchain, there is a burgeoning ecosystem that merges art, culture, and technology. Akin to the Renaissance period where art flourished with the patronage of wealthy benefactors, the digital age ushers in a new era for creators &#8211; bolstered now by the democratic and decentralized nature of blockchain technology. This enables a diverse range of voices to contribute to the cultural tapestry of the digital realm, unhindered by traditional barriers to entry such as geography or financial constraint.</p>



<p>Moreover, the role of ordinals extends into realms such as provenance verification for collectibles, gaming assets, and even digital identity authentication. The ability to trace the lifetime journey of a digital asset from creation to its various points of ownership gives unparalleled transparency to the digital economy. This transparency is not only a boon to creators and collectors but also to those who seek to preserve the authenticity and heritage of digital artworks and other valuable digital assets. As the technology and its applications evolve, we can expect ordinals to play a significant role in shaping the landscape of digital ownership and the valorization of digital arts and goods.</p>



<h2 class="wp-block-heading" id="h2-8">Common challenges and risks</h2>



<p>While ordinals contribute significantly to Bitcoin’s development, they also pose certain challenges and expose vulnerabilities:</p>



<ul class="wp-block-list">
<li>Potential Vulnerabilities and Attacks: The uniqueness of ordinals may be exploited if not properly safeguarded, leading to targeted attacks on specific satoshis.</li>



<li>Regulatory Concerns and Legal Implications: As regulators grapple with the rapid innovation in cryptocurrencies, the distinct nature of ordinals could complicate the legal classification of digital assets.</li>
</ul>



<h3 class="wp-block-heading" id="h_01HNMP8954HHNB9HBDWTDW5ZMJ">Conclusion</h3>



<p>Ordinals represent another step forward in the dynamic world of Bitcoin and cryptocurrencies. They offer a fascinating angle from which to view and understand the nuances of blockchain transactions. Whether you are an investor, a hobbyist, or simply curious about this next era of technology, it’s clear that ordinals have a pivotal role to play in shaping the future of digital finance.</p>



<p>For those tethered to the Bitcoin odyssey or anyone who yearns to decode the sophisticated constructs beneath the surface, delving into the realm of ordinals is not just a scholarly endeavour but a practical pursuit, unlocking a future where digital transactions are as nuanced as they are revolutionary. Keep your explorations going, for in the world of Bitcoin, every new piece of knowledge is a potential key to unlocking untold opportunities.</p>



<h3 class="wp-block-heading" id="h_01JD8WKTVHSCQW46WDJWS4PHA3"><strong>About&nbsp;</strong><strong>XT.COM</strong></h3>



<p>Founded in 2018,&nbsp;<a href="http://www.xt.com/en">XT.COM</a>&nbsp;now serves nearly 8 million registered users, over 1,000,000+ monthly active users and 40+ million users in the ecosystem. Our comprehensive trading platform supports 800+ high-quality tokens and 1000+ trading pairs. XT.COM&nbsp;<a href="https://www.xt.com/en">crypto exchange</a>&nbsp;supports a rich variety of trading, such as&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt">spot trading</a>,&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt?type=margin">margin trading</a>, and&nbsp;<a href="https://www.xt.com/en/futures">futures trading</a>&nbsp;together with an aggregated&nbsp;<a href="https://www.xt.com/en/nft">NFT marketplace</a>. Our platform strives to cater to our large user base by providing a secure, trusted and intuitive trading experience.</p>


What Are Ordinals? Bitcoin Inscriptions Explained


<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/13563167226393" alt="USDT-M-PERPETUAL-COVER-EN.jpg"/></figure>



<h3 class="wp-block-heading"><strong>Contents of this article</strong></h3>



<p><a href="#h2-1">What are USDT Margined futures contacts?</a></p>



<p><a href="#h2-2">What are USDT Margined (Collateralized) perpetual contracts?</a></p>



<p><a href="#h2-3">How to trade USDT Margined Perpetual Futures on XT.COM</a></p>



<h2 class="wp-block-heading" id="h2-1">What are USDT Margined futures contacts?</h2>



<p>USDT Margined futures contracts are a type of financial instrument that allow traders to buy and sell commodities, equities, or other assets using USDT as collateral. These contracts give traders the ability to take positions in volatile markets while maintaining minimal exposure to risk, since they can liquidate their contract at any time by redeeming their USDT collateral. Additionally, many exchanges like&nbsp;<a href="https://www.xt.com/en/futures">XT.COM futures</a>&nbsp;offer margin trading for USDT Margined futures contracts, allowing investors to leverage their capital and increase their potential returns. This means that investors can leverage their capital by borrowing additional funds from the exchange based on the value of their initial position. While this can lead to higher returns, it also increases the risk of losses if the market moves against their position. Overall, USDT Margined futures contracts are a valuable tool for traders and speculators looking to participate in the fast-paced world of financial markets. Whether you are looking to take short positions or make long-term investments, these contracts can help you achieve your trading goals by allowing you to trade with minimal capital and take advantage of changing market conditions.</p>



<h3 class="wp-block-heading" id="h_01JD8TTXD5Y10R0FGK1018RGF9">Characteristics of USDT-margined Contracts&nbsp;</h3>



<p>USDT-margined futures contracts are more suitable for risk hedging and arbitrage. Due to the fact that there is no borrowing and lending of funds, the participants do not need to pay interest on their positions, so that they can benefit from a higher trading margin rate. Compared with other traditional products, USDT-margined futures contracts are less risky and more efficient. Furthermore, USDT-margined futures contracts enable investors to take either long or short positions, offering them a much wider range of choices.</p>



<p>Profit in USDT and know exactly what you’ll make! USDT-margined contracts take the guesswork out of cryptocurrency trading. By using a stablecoin pegged to the US dollar, traders can easily estimate their returns &#8211; no more having to convert BTC into fiat or being unsure of what that 500 was worth at conversion time. With these linear futures products, making profits simply means standing by as your account balance steadily increases in real U.S dollars – just like folding money!</p>



<h3 class="wp-block-heading" id="h_01JD8TTXD5HCKND7PPRRT6R0QC">Mechanism for USDT-margined Contract</h3>



<p>USDT-margined contracts implement price-time-priority algorithm, the earliest active buy order at the highest price takes priority over any subsequent order at that price, which in turn takes priority over any active buy order at a lower price. When the margin ratio is equal to or less than 0, liquidation will be triggered for the position.</p>



<p>The formulas are as below:</p>



<p>Isolated Margin Ratio = Account Equity / Occupied Margin * 100% – Adjustment Factor;</p>



<p>Cross Margin Ratio = Account Equity / ∑All Contracts in the Cross Margin Account (Occupied Margin * Adjustment Factor）– 100%</p>



<h2 class="wp-block-heading" id="h2-2">What are USDT Margined (Collateralized) perpetual contracts?</h2>



<p>USDT Margined (Collateralized) perpetual futures contracts are a new type of investment instrument, which enable traders to speculate on the value of cryptocurrencies. This type of contract allows traders to effectively ‘borrow’ USDT from the underlying exchange in order to leverage their trades, with the USDT collateral being held as security for any potential losses or gains that may arise from opening and closing these positions. The contract has no expiration date and is designed to closely track the spot price of the underlying asset via Funding mechanism. This perpetual structure provides perpetual liquidity, meaning there is no need to roll over trades or wait for the expiration of existing contracts. While it is certainly a risky venture due to its high-leverage nature, USDT margined perpetual futures contracts are attractive to experienced traders who want more control over their investments and exposure through more precise risk management strategies.</p>



<p>Take USDT Collateralized BTC Perpetual Contract as an example, a trader longs 1,000 contracts at a price of 10,000 USDT, and the value of a contract is 0.001 BTC. Equivalently, they are longing 1,000 * 0.001 = 1 BTC. P&amp;L Calculation equals to No. of Contracts * Multiplier * (Exit Price &#8211; Entry Price). After several days, the price rises to 12,000 USDT, so trader earn a profit of 1,000 * 0.001 * (12,000 &#8211; 10,000) = 2,000 USDT. On the contrary, a trader who is shorting the same amounts of contracts will lose 2,000 USDT during this time. (Fees are not included)</p>



<h3 class="wp-block-heading" id="h_01JD8TTXD56FF2AQJB6PKFYGNF">Terminology</h3>



<ul class="wp-block-list">
<li>P&amp;L</li>
</ul>



<p>P&amp;L stands for Profit &amp; Loss. All USDT collateralized contracts use USDT to calculate PnL. The Profit and Loss (PnL) is calculated as {future exit price- future entry price} x position size/future entry price. When calculate the PnL of&nbsp;<a href="https://www.xt.com/en/futures">XT.COM Futures</a>&nbsp;USDT Margined futures contacts, traders need to consider three aspects: the expenditure of service fees, the income or expenditure of funding fees, and the profit and loss of closing positions. Click&nbsp;<a href="https://xtsupport.zendesk.com/hc/en-us/articles/7279950434073-Profit-and-Loss-Calculation">here</a>&nbsp;to check more details.</p>



<ul class="wp-block-list">
<li>Leverage and Margin</li>
</ul>



<p>Leverage in these contracts allows traders to open a larger position than their capital would normally allow by trading with borrowed funds. Leverage is an extremely powerful tool that can be used to increase both gains and losses when trading perpetual futures contracts. Leverage also impacts the amount of margin required to open a position since higher leverage equates to a lower initial margin requirement. Leverage is therefore a critical factor for traders looking at perpetual futures contracts and should be carefully considered if utilizing this type of contract.</p>



<p>Margin refers to the difference in margin requirements between margin deposits and margin calls. Margin deposits are the funds placed into an account for margin purposes, whereas margin calls require additional funds due to market changes or potential losses. Thus, margin establishes the amount of money required to have reasonable protection from adverse price movements and to from losses in a perpetual futures contract. This helps maintain stability in the markets and enables traders to enter positions with reasonable certainty that their margin requirements will not be detrimental if prices move against them.</p>



<ul class="wp-block-list">
<li>Liquidation</li>
</ul>



<p>Liquidation in a perpetual futures contract is when a trader’s account balance falls to an amount that doesn’t meet the maintenance margin. This happens when the losses that are associated with their open trades surpass the available margin in their trading account. Liquidation acts as a mechanism to ensure that traders continually maintain sufficient funds in their trading accounts to honor the risk associated with their open positions. Liquidation also helps traders avoid unfavorable pricing caused by illiquid markets or manipulation of prices. Liquidation limits the potential losses of a trader while providing safe and secure markets for everyone involved.</p>



<ul class="wp-block-list">
<li>Market Price, Mark Price and the Index Price</li>
</ul>



<p>Market Price: Market Price is the current fair value of an underlying asset including its basis spread, funding rate, and insurance fund factor. Market Price will constantly adjust through the day from trades being executed with buyers and sellers. Market Price is used to set the amount of margin required to maintain a position in perpetual futures contract as well as when a user wishes to open a new position. Market Price plays an important role in dictating how much margin a trader or investor needs to maintain their positions on the exchange based upon their financial goals and strategies.</p>



<p>Mark Price: Mark Price is typically set equal to the underlying index price and acts as a reference point when executing trades and calculating margin requirements. Mark Price also serves as the starting point for Mark-to-Market calculations in which gains and losses resulting from changes in price are automatically settled within a futures contract. Mark Price allows traders of perpetual futures contracts to be able to enter and exit their positions with greater certainty that their differences will be calculated accurately and reliably.</p>



<p>Index Price: Index Price refers to the current market price of a perpetual futures contract. Index prices are determined by taking the average of all bids and offers in that particular contract. Index Price is an important factor regarding calculating your margin requirement when trading perpetual futures contracts, as it allows you to calculate how much money you need to set aside in order to cover potential losses on any open positions you have. If Index Price drops, then so does your margin requirement, whereas if Index Price increases, then so does your margin requirement. It is critical for traders to stay up to date with Index Price in order to adjust their strategy accordingly and remain profitable. Check&nbsp;<a href="https://www.xt.com/en/futures/information/index">XT.COM Futures index price</a>&nbsp;here.</p>



<ul class="wp-block-list">
<li>Isolated Margin and Cross Margin</li>
</ul>



<p>Isolated Margin: Isolated Margin is a type of margin offered with perpetual futures contracts. This type of margin allows traders to manage their risk in a more efficient way by allowing only part of their position to be automatically liquidated if there is a significant price movement. Isolated Margin also provides traders plenty of liquidity while they maintain open positions, allowing them to make more strategic decisions when the markets move quickly.</p>



<p>Cross Margin: Cross Margin is an optional margin mode that reduces the margin requirement for traders, allowing them to take on larger positions without having to deposit extra funds into their account. Cross Margin works by allowing traders to spread their total account collateral over all of the positions held in the same contract. Therefore, Cross Margin ensures that traders have adequate margin levels across all positions in a particular contract and can allow them to increase their position size if desired.</p>



<ul class="wp-block-list">
<li>Perpetual Funding Rates</li>
</ul>



<p>Funding Rates in perpetual futures contract margin is a payment that occurs between Funding Pairs. Its purpose is to encourage both Funding Providers and Funding Receivers to maintain equality between the long and short sides of the contract. Funding Rates also provide an incentive for Funding Providers by encouraging them to hold positions at, or nearer to, the Funding Target Price. A Funding Provider is anyone who is long on the contract and a Funding Receiver is anyone who is short on the contract. Funding Rates are calculated in accordance with the Spot Index Price and Fair Price Mark, payable in USDT tokens. Whenever Funding Rate occurs, all positions held within that particular perpetual futures contract will be affected, warranting frequent monitoring from involved parties. Check&nbsp;<a href="https://www.xt.com/en/futures/information/fund-rate">XT.COM Futures funding rates</a>&nbsp;here.</p>



<ul class="wp-block-list">
<li>Risk Protection Fund</li>
</ul>



<p>Risk Protection Fund is a mandatory fund in perpetual futures contracts which ensures that there’s always margin available to serve as collateral. Spin-off products, such as swap futures and options, also use Risk Protection Funds to back up the customer accounts in order to cover any losses over and above their own contribution. The Risk Protection Fund helps protect traders against any market force or technical issues that can cause instant liquidation of their positions due to insufficient margin. Visiting traders are only required to pay a small expense ratio instead of upfront payments, allowing them more freedom to explore new opportunities and take greater risks knowing the Risk Protection Fund has them covered. Check&nbsp;<a href="https://www.xt.com/en/futures/information/risk-fund">XT.COM Futures risk protection fund</a>&nbsp;here.</p>



<h2 class="wp-block-heading" id="h2-3">How to trade USDT Margined Perpetual Futures on XT.COM</h2>



<p>Welcome to our tutorial on how to trade USDT-M perpetual futures contracts.</p>



<p>1.&nbsp;<a href="https://www.xt.com/en/accounts/register">Register an account</a>&nbsp;or&nbsp;<a href="https://www.xt.com/en/accounts/login">log in</a>&nbsp;to XT.COM</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/13563575726873" alt="1-XT-signup-EN.png"/></figure>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/13563577485465" alt="1-XT-login-EN.jpg"/></figure>



<p>2. Click&nbsp;<a href="https://www.xt.com/en/futures">Derivatives</a>&nbsp;on the navigation bar and tap “<a href="https://www.xt.com/en/futures/trade/btc_usdt">USDT-M Futures</a>” to enter into the trading page.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/13563571677337" alt="2-en.jpg"/></figure>



<p>3. To begin trading, choose an asset from the left panel. For example: Selecting&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt">BTC/USDT Perpetual</a>.</p>



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<p>4. Then, based on your judgement, choose “Open Long” or “Open Short”. You can place a bet on the future direction of the market by buying or selling contracts. A long position means you expect the market to rise, while a short position means you expect it to fall.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/13563680378009" alt="4-long-short-en.jpg"/></figure>



<p>5. If we place a limit order, there will be three different types of limit orders that we can place: GTC, IOC, and FOK.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/13563667336985" alt="5-en.jpg"/></figure>



<p>6. After choosing an order type, select the margin mode, unit, and leverage for trading. You can use “BTC” or “USDT” as a unit to calculate trading cost and profits.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/13563667591705" alt="6-en.jpg"/></figure>



<p>7. Enter the price, amount, and click “Open Long” to place the order.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/13563667735961" alt="7-en.jpg"/></figure>



<p>8. As soon as you place your order, click on “Filled Positions” to check whether it has been filled or not. The orders that have been completed will be listed under “Current Positions”, while the ones that haven’t been filled yet will be shown under “Open Orders”.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/13563681533977" alt="8-en.jpg"/></figure>



<p>9. If you want to close a position, you can choose an order type, enter the price and amount, and choose a leverage to close the position.</p>



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<h3 class="wp-block-heading" id="h_01JD8TVWHVV1C43CGDX1SAE4GE">About XT.COM</h3>



<p>Founded in 2018,&nbsp;<a href="http://www.xt.com/en">XT.COM</a>&nbsp;now serves nearly 8 million registered users, over 1,000,000+ monthly active users and 40+ million users in the ecosystem. Our comprehensive trading platform supports 800+ high-quality tokens and 1000+ trading pairs. XT.COM&nbsp;<a href="https://www.xt.com/en">crypto exchange</a>&nbsp;supports a rich variety of trading, such as&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt">spot trading</a>,&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt?type=margin">margin trading</a>, and&nbsp;<a href="https://www.xt.com/en/futures">futures trading</a>&nbsp;together with an aggregated&nbsp;<a href="https://www.xt.com/en/nft">NFT marketplace</a>. Our platform strives to cater to our large user base by providing a secure, trusted and intuitive trading experience.</p>


What is USDT-M Perpetual Futures Trading and How to Trade USDT-margined Futures on XT Futures


<p>The Bitcoin halving is a key event in the crypto world, and one that impacts both miners’ rewards as well as price speculation. On May 11th 2020 we saw this happen for the third time since its inception over ten years ago, cutting miner reward per block from 12.5 BTC to 6.25 BTC. This has caused some unease among investors who are used to ever-increasing returns from mining activities but with it placing further constraints on supply of new coins means scarcity should potentially increase which could see prices rise again when speculators enter back into markets after 2024’s likely 4th halving round occurs!</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/13897339173017" alt="bitcoin-halving-1.jpg"/></figure>



<h3 class="wp-block-heading">Table of Contents</h3>



<p><a href="#h2-1">What is Bitcoin halving?</a></p>



<p><a href="#h2-2">How does Bitcoin halving work?</a></p>



<p><a href="#h2-3">How to trade Bitcoin halving?</a></p>



<p><a href="#h2-4">Why Bitcoin halving occurs?</a></p>



<p><a href="#h2-5">What happens to Bitcoin prices during halving?</a></p>



<p><a href="#h2-6">What are implications of the Bitcoin halving event?</a></p>



<h2 class="wp-block-heading" id="h2-1">What is Bitcoin halving?</h2>



<p>Bitcoin halving is a process that occurs roughly every four years where the reward for mining new blocks is halved, meaning miners receive 50% fewer bitcoins for verifying transactions. This reduction in bitcoin supply has been implemented to control bitcoin inflation, making bitcoin an increasingly scarce resource over time. After every four years, the block rewards halving occurs and will proceed up until 2140 when it reaches completion. By that point in time, Bitcoin’s maximum supply limit would have been reached &#8211; shifting miners’ incentives to transaction fees provided by users for verifying transactions. As bitcoin becomes more and more scarce, speculation in its future value increases, thus raising its overall market price &#8211; something that any early bitcoin adopter should be sure to keep an eye on. Additionally, bitcoin halving encourages miners to increase efficiency by pushing them to develop new methods of creating bitcoin faster or else face losing out on rewards. As such, bitcoin halving offers an interesting insight into the delicate balance between production and demand in matters of digital currency.</p>



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<h3 class="wp-block-heading" id="h_01JD8VMEQ6GP7A11ZWQA54DEA4">The history of Bitcoin halving</h3>



<p>Bitcoin has seen immense growth since its inaugural 2009 launch, with the first halving occurring in 2012. This event sparked questions of how Satoshi’s economic principles would shape Bitcoin’s future &#8211; will it succeed or collapse? On November 28th, 2012 the reward for mining a single block reduced from 50BTC to 25BTC; this event was met by incredible success as 1 BTC surged over 8500% within twelve months to a staggering $1,031.95. By that time 210,000 blocks had been mined and half of all Bitcoin (10.5 million) entered circulation.</p>



<p>The crypto community were eagerly awaiting the second halving in 2016, with investors beginning to take more of an interest and increased acceptance for bitcoin. This heightened anticipation led to a short-term price growth ahead of July 9<sup>th</sup>’s highly anticipated date. When the commitment of miners to Bitcoin was renewed with block 420,000 and rewards were halved to 12.5 BTC per mined block, some cautionary market behavior ensued as predicted. As it turns out however, this hesitation only served to establish a platform for unprecedented growth and success; 526 days later one bitcoin reached an unsurpassed peak value of $20k &#8211; exceeding even the most optimistic evaluations.</p>



<p>With the 2020 halving, Bitcoin was entering a new era amidst much uncertainty due to the COVID-19 crisis. The economics of Satoshi’s design proved powerful as BTC surged from an eventual $8787/BTC rate around May 11th at block number 630,000 all way up to over $66K/BTC 18 months later &#8211; showcasing its resilience and potential in tumultuous times.</p>



<p>Even though Nobody knows exactly when the next halving will occur, cryptocurrency experts predict that the next Bitcoin halving is likely to occur in May of 2024, approximately four years after the last event.</p>



<h2 class="wp-block-heading" id="h2-2">How does Bitcoin halving work?</h2>



<p>Bitcoin mining is the process of using computers to discover and confirm bitcoin transactions on the bitcoin blockchain, which is a distributed public ledger, then add them to the previous ledgers and releasing new bitcoins into circulation. All bitcoin miners compete with each other to solve a difficult mathematical puzzle in order to find the next bitcoin block, have it confirmed by bitcoin network, then receive money as a reward for their efforts.</p>



<p>With a decentralized network of validators verifying Bitcoin transactions, miners are rewarded with 6.25 BTC when they complete the computationally intensive task of solving complex mathematical equations to add new blocks to the blockchain &#8211; an integral part in ensuring that all exchanges remain secure and verifiable. With a market value of over $148,000 for 6.25 Bitcoin (BTC), miners have no shortage of incentive to ensure that the blockchain operates as it should: smoothly and securely processing transactions. Miners are given a reward every 10 minutes for their hard work when they add blocks of transactions to the Bitcoin network. However, this bounty is halved approximately every four years after 210,000 blocks have been created.</p>



<h2 class="wp-block-heading" id="h2-3">How to trade Bitcoin halving?</h2>



<p>Bitcoin’s halving event offers traders a huge opportunity. Jump onboard the crypto phenomena and speculate on bitcoin’s future price using&nbsp;<a href="https://www.xt.com/en/futures">XT Futures</a>, or purchase the coins directly through&nbsp;<a href="https://www.xt.com/en">XT Crypto Exchange</a>.&nbsp;</p>



<p>For Bitcoin spot trading:&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt" target="_blank" rel="noreferrer noopener">BTC/USDT</a></p>



<p>For Bitcoin futures trading:&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt">BTC/USDT Perpetual</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt">BTC/USD Perpetual</a></p>



<p>Discover more about&nbsp;<a href="https://xtsupport.zendesk.com/hc/en-us/articles/13414665747865-Bitcoin-Futures-Trading-A-Comprehensive-Guide">bitcoin futures trading</a></p>



<h2 class="wp-block-heading" id="h2-4">Why Bitcoin halving occurs?</h2>



<p>Bitcoin halves due to the design of its software, which was created by a mysterious person or group using the assumed pseudonym ‘Satoshi Nakamoto’. Satoshi Nakamoto’s mysterious motivations for the halving system remain shrouded in secrecy. However, it is widely suggested that this clever mechanism was created to strategically disperse coins early on as an incentive for miners to join and support Bitcoin’s blockchain network. According to this theory, block rewards were strategically halved at regular intervals in order to safeguard the increasing value of each reward as more miners joined the network.</p>



<p>With only a limited supply of 21 million, the scarcity and value of bitcoin is secured through its halving process. As blocks are mined, each block brings with it fewer bitcoins than before until that ultimate limit of 21 million has been reached &#8211; when no new coins can be issued. At this point existing holders will benefit from an increase in demand as supplies become increasingly scarce. Bitcoin halving is an integral part of the bitcoin system. It is programmed into bitcoin’s protocol which, in turn, triggers a reduction in miner rewards roughly once every four years. This process reduces bitcoin supply by cutting the miner rewards that are issued for solving complex cryptographic puzzles associated with bitcoin mining.</p>



<h2 class="wp-block-heading" id="h2-5">What happens to Bitcoin prices during halving?</h2>



<p>Looking into the past, bitcoin halving appears to have a substantial impact on its value in the market. It is important to remember however that this effect can be outweighed by other influencing elements at play.</p>



<p>First halving: In 2012, the first halving of Bitcoin saw its price rise from an underwhelming $11 to a much more promising $12. Taking only 12 months for it to soar up towards the thousands, with prices reaching around an astonishing $1,100 in that same timespan.</p>



<p>Second halving: In 2016, the bitcoin network reached a major milestone: 420,000 blocks completed. This was also when the second halving of Bitcoin occurred &#8211; an event that preceded its dramatic price increase. Following several months in which it fluctuated between $500-$1,000 per coin, by December 2017 it had skyrocketed to nearly $20,000.</p>



<p>Third halving: In May 2020, the third halving of Bitcoin occurred and it marked another powerful surge in its value. Within a few months, this cryptocurrency rose from an estimate $9000 to a staggering $30 000 by year-end. On April 14, 2021, a bitcoin’s price soared to $63,233 (an astonishing 617% increase from its pre-halving price). A month later, on May 11, 2021, a bitcoin’s price was $49,504, representing a 461% increase that seems more consistent with the behavior of the 2016 halving.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/13898085173145" alt="bitcoin-halving-price.jpg"/></figure>



<h2 class="wp-block-heading" id="h2-6">What are implications of the Bitcoin halving event?</h2>



<p>It has implications on bitcoin miners as they now have to compete harder to earn payouts due to the smaller rewards, potentially resulting in fewer miners. The eventual long-term implications are unclear, however there may be less energy consumption required to support bitcoin mining with fewer miners in the market. Supporters of bitcoin also tout that rarity created by bitcoin halving will drive up its price due to greater demand while detractors view it delaying bitcoin’s mainstream adoption because it requires a much higher investment than before.</p>



<p>Halving is also a big deal for cryptocurrency investors. It’s when the amount of coins issued to miners per block gets cut in half, reducing supply and driving up prices due to increased demand &#8211; typically good news for crypto traders. Even though each halving has its own unique conditions that influence price changes, trading activities are often boosted leading into it as people anticipate what will happen next. All in all, it can certainly have an impact on investors and bitcoin miners alike as both parties will adjust according to the changing dynamics of bitcoin’s scarcity and supply.</p>



<h3 class="wp-block-heading" id="h_01JD8VMEQ65HXYQ0G7PK8V3VHZ"><strong>About XT.COM</strong></h3>



<p>Founded in 2018,&nbsp;<a href="http://www.xt.com/en">XT.COM</a>&nbsp;now serves nearly 8 million registered users, over 1,000,000+ monthly active users and 40+ million users in the ecosystem. Our comprehensive trading platform supports 800+ high-quality tokens and 1000+ trading pairs. XT.COM&nbsp;<a href="https://www.xt.com/en">crypto exchange</a>&nbsp;supports a rich variety of trading, such as&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt">spot trading</a>,&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt?type=margin">margin trading</a>, and&nbsp;<a href="https://www.xt.com/en/futures">futures trading</a>&nbsp;together with an aggregated&nbsp;<a href="https://www.xt.com/en/nft">NFT marketplace</a>. Our platform strives to cater to our large user base by providing a secure, trusted and intuitive trading experience.</p>


How Bitcoin Halving Influences Supply, Demand, and Price Trends

Bitcoin Halving


<figure class="wp-block-image size-large"><img data-recalc-dims="1" loading="lazy" decoding="async" width="1024" height="597" data-attachment-id="2142" data-permalink="https://xtexchangeblog.wpcomstaging.com/en/the-reverse-position-feature-in-futures/xt-futures-cover-4/" data-orig-file="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?fit=1200%2C700&amp;ssl=1" data-orig-size="1200,700" data-comments-opened="1" data-image-meta="{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}" data-image-title="xt-futures-cover" data-image-description="" data-image-caption="" data-medium-file="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?fit=300%2C175&amp;ssl=1" data-large-file="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?fit=1024%2C597&amp;ssl=1" src="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?resize=1024%2C597&#038;ssl=1" alt="xt-futures-cover" class="wp-image-2142" srcset="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?resize=1024%2C597&amp;ssl=1 1024w, https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?resize=300%2C175&amp;ssl=1 300w, https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?resize=768%2C448&amp;ssl=1 768w, https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?w=1200&amp;ssl=1 1200w" sizes="auto, (max-width: 1000px) 100vw, 1000px" /></figure>



<h3 class="wp-block-heading"><strong>Table of Contents</strong></h3>



<p><a href="#h2-1">What is XT.COM Futures Grid trading?</a></p>



<p><a href="#h2-2">Futures Grid Bot offers three (3) ways</a></p>



<p><a href="#h2-3">Options and parameters</a></p>



<p><a href="#h2-4">XT.COM futures grid profit and loss calculation</a></p>



<h2 class="wp-block-heading" id="h2-1"><strong>1.What is XT.COM Futures Grid trading?</strong></h2>



<p><a href="https://www.xt.com/en/strategy/futures/grid/btc_usdt">Futures grid trading</a>&nbsp;is an automated strategy that uses market fluctuations to trade futures contracts with preset intervals within a specific price range to make a profit. The strategy will continuously buy low and sell high for each grid defined, and profit from the volatile market.</p>



<p>The futures grid currently supports all&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt">USDT-margined futures</a>&nbsp;and will support&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd">crypto-margined futures</a>&nbsp;in the future.</p>



<h2 class="wp-block-heading" id="h2-2"><strong>2.Futures Grid Bot offers three (3) ways</strong></h2>



<h4 class="wp-block-heading"><strong>2.1 Long mode is suitable for volatile market conditions where prices are rising. Long grids will enter long positions upon creation at market price, and take profits by closing long positions when the price rises.</strong></h4>



<p><strong>Example:</strong></p>



<p>Suppose Trader creates a Futures Grid Bot strategy on XT.COM based on the following parameters:</p>



<p>Futures trading pair：BTCUSDT</p>



<p>Market price：35,000 USDT</p>



<p>Upper price：45,000 USDT</p>



<p>Lower price：20,000 USDT</p>



<p>Number of grids: 5</p>



<p>Grid mode：Geometric</p>



<p>Leverage：5x</p>



<p>Intervals：17.61% ≈( (45,000/20,000)(1/5)&nbsp; – 1)*100%</p>



<p><strong>Note:</strong></p>



<p>Geometric: Each grid has an equal price difference ratio. For example, if the interval is 17.61%. The price of the next order will be 17.61% higher than the previous price.</p>



<p>The system will calculate the price of each grid and place your orders with 2x leverage. When the Future Grid Bot strategy is successfully activated, the positions will be placed as follows.&nbsp;</p>



<p>20,000 Buy Limit (Open Long)</p>



<p>23522 Buy Limit (Open Long)</p>



<p>27664 Buy Limit (Open Long)</p>



<p>Market price: 35000（No order will be placed）</p>



<p>37075 Sell Limit (Close Long)</p>



<p>45000 Sell Limit (Close Long)</p>



<p>Your Grid Bot will only operate within the upper and lower price bounds that have been configured. When the BTC price rises above 45,000 USDT or falls below 20,000 USDT, no new order will be placed by the Grid Bot until the BTC price returns to the price range.</p>



<h4 class="wp-block-heading"><strong>2.2 Short mode is suitable for volatile market conditions where prices are falling. Short grids will enter short positions upon creation at market price and take profits by closing short positions when the price falls.</strong></h4>



<p><strong>Example:</strong></p>



<p>Suppose Trader creates a Futures Grid Bot strategy on XT.COM based on the following parameters:</p>



<p>Derivatives trading pair：BTCUSDT</p>



<p>Market price：30,000 USDT</p>



<p>Upper price：45,000 USDT</p>



<p>Lower price：20,000 USDT</p>



<p>Number of grids：5</p>



<p>Grid mode：Arithmetic</p>



<p>Leverage：5x</p>



<p>Intervals：5,000 = (45,000 − 20,000)/5</p>



<p><strong>Note:</strong></p>



<p>Arithmetic: Each grid has the same price difference. For example, if the interval is 5,000 USDT. The price of the next order will be 5,000 USDT higher than the previous price.</p>



<p>The system will calculate the price of each grid and place your orders with 5x leverage. When the Future Grid Bot strategy is successfully activated, the positions will be placed as follows:</p>



<p>45000 Sell Limit (Open Short)</p>



<p>40000 Sell Limit (Open Short)</p>



<p>35000 Sell Limit (Open Short)</p>



<p>Market price: 30,000（No order will be placed）</p>



<p>25000 Buy Limit (Close Short)</p>



<p>20000 Buy Limit (Close Short)</p>



<p>Your Grid Bot will only operate within the upper and lower price bounds that have been configured. When the BTC price rises above 45,000 USDT or falls below 20,000 USDT, no new order will be placed by the Grid Bot until the BTC price returns to the price range.</p>



<h4 class="wp-block-heading"><strong>2.3 For neutral mode, the bot will short the futures contracts when price is above the base price and long the futures contracts when the price is below the base price. The bot will place long orders below the base price and short orders above the base price. When the market price hits the preset price, the long/short position will be opened, depending on which order direction is filled.</strong></h4>



<p><strong>Example</strong><strong>:</strong></p>



<p>Futures：BTC USDT perpetual</p>



<p>Price：20000-45000</p>



<p>Number of grids：5</p>



<p>Grid mode: Arithmetic</p>



<p>Leverage：5</p>



<p>Intervals：5000 = (45000 − 20000)/5</p>



<p><strong>Note:</strong></p>



<p>For Arithmetic, each grid has the same price difference. For example, if the interval is 5000</p>



<p>USDT, then the grids are: 20000, 25000, 30000, 35000, 40000, 45000。Market price: 35000.</p>



<p>45000 Open Short</p>



<p>40000 Open Short</p>



<p>35000 No order will be placed</p>



<p>30000 Open Long</p>



<p>25000 Open Long</p>



<p>20000 Open Long</p>



<p>Your Grid bot will only operate within the upper and lower price bounds that have been configured. When the BTC price rises above 45,000 USDT or falls below 20,000 USDT, no new order will be placed by the Grid Bot until the BTC price returns to the price range.</p>



<p>Users can select the corresponding futures grid strategy based on its insight on the market outlook.</p>



<h3 class="wp-block-heading" id="h2-3"><strong>3.Options and parameters</strong></h3>



<h4 class="wp-block-heading"><strong>3.1 Setup Options</strong></h4>



<p>AI strategy: Use the parameters recommended by backtested strategy (These parameters are based on a 7 days’, 30 days’, and 180 days’ backtest of this pair).</p>



<p>Set myself: Set parameters based on your own analysis of the market.</p>



<h4 class="wp-block-heading"><strong>3.2 Grid Trading Parameters</strong></h4>



<p><strong>Grid &#8211; Arithmetic grid:</strong>&nbsp;It keeps the same common difference between each grid. (For example: 1, 2, 3, 4.)</p>



<p><strong>Grid &#8211; Geometric grid:</strong>&nbsp;It keeps the same common ratio between each grid. (For example: 1, 2, 4, 8.)</p>



<p><strong>Lower price:</strong>&nbsp;The bot will stop placing orders when the market price is lower than the lowest price.</p>



<p><strong>Upper price:</strong>&nbsp;The bot will stop placing orders when the market price is higher than the highest price.</p>



<p><strong>Grid quantity:</strong>&nbsp;The number of grids represents the number of pending orders divided in the price range. For example, if the price range is 10000-40000, the mode is arithmetic, and the number of grids is 3, it is divided into three grids: 10000-20000, 20000-30000, and 30000-40000.</p>



<p><strong>Initial Margin:</strong>&nbsp;After entering the lower price or upper price, calculate the minimum initial margin according to the formula. The minimum initial margin ≤ filled initial margin ≤ futures account balance.</p>



<p><strong>Grid trigger:</strong>&nbsp;The grid orders will be triggered when the last price or mark price rises above or falls below the trigger price you enter.</p>



<p><strong>Stop trigger:</strong>&nbsp;The Stop_upper_limit needs to be higher than the upper price limit, latest price, and trigger price. When the market price reaches the Stop_upper_limit, the grid will stop its operation.</p>



<p>The Stop_lower_limit should be lower than the lower price limit, latest price, and trigger price. When the latest market price reaches the Stop_lower_limit, the grid will stop its operation.</p>



<h3 class="wp-block-heading" id="h2-4"><strong>4.XT.COM futures grid profit and loss calculation</strong></h3>



<p><strong>Grid profit</strong></p>



<p>Grid profit refers to the total income generated by the automatic trading of the current futures grid strategy.</p>



<p>Grid profit = Price Interval × Trading Volume Per Grid (Long) × Grid Transaction Times − Service Fee</p>



<p><strong>Grid annualized rate of return</strong></p>



<p>Annualized Rate of Return = Total Profit/Initial Margin/Days of Operation*365*100%</p>



<p>Assuming Trader’s grid strategy runs for 24 hours:</p>



<p>Annualized Rate of Return = 500/10,000/1 × 365 × 100%= 18.25%</p>



<p><strong>Note:</strong></p>



<p>If the operation time of the futures grid bot is less than one day, it is counted as one day.</p>



<p>If the user manually closes the position or cancels the order, the grid strategy will be terminated.</p>



<h3 class="wp-block-heading"><strong>About&nbsp;</strong><strong>XT.COM</strong></h3>



<p>Founded in 2018,&nbsp;<a href="http://www.xt.com/en">XT.COM</a>&nbsp;now serves nearly 8 million registered users, over 1,000,000+ monthly active users and 40+ million users in the ecosystem. Our comprehensive trading platform supports 800+ high-quality tokens and 1000+ trading pairs. XT.COM&nbsp;<a href="https://www.xt.com/en">crypto exchange</a>&nbsp;supports a rich variety of trading, such as&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt">spot trading</a>,&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt?type=margin">margin trading</a>, and&nbsp;<a href="https://www.xt.com/en/futures">futures trading</a>&nbsp;together with an aggregated&nbsp;<a href="https://www.xt.com/en/nft">NFT marketplace</a>. Our platform strives to cater to our large user base by providing a secure, trusted and intuitive trading experience.</p>


XT.COM Contract Grid Strategy Overview

Contract Grid Strategy Overview


<figure class="wp-block-image size-large"><img data-recalc-dims="1" loading="lazy" decoding="async" width="1024" height="597" data-attachment-id="2142" data-permalink="https://xtexchangeblog.wpcomstaging.com/en/the-reverse-position-feature-in-futures/xt-futures-cover-4/" data-orig-file="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?fit=1200%2C700&amp;ssl=1" data-orig-size="1200,700" data-comments-opened="1" data-image-meta="{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}" data-image-title="xt-futures-cover" data-image-description="" data-image-caption="" data-medium-file="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?fit=300%2C175&amp;ssl=1" data-large-file="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?fit=1024%2C597&amp;ssl=1" src="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?resize=1024%2C597&#038;ssl=1" alt="xt-futures-cover" class="wp-image-2142" srcset="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?resize=1024%2C597&amp;ssl=1 1024w, https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?resize=300%2C175&amp;ssl=1 300w, https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?resize=768%2C448&amp;ssl=1 768w, https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?w=1200&amp;ssl=1 1200w" sizes="auto, (max-width: 1000px) 100vw, 1000px" /></figure>



<h3 class="wp-block-heading"><strong>Content of this article:</strong></h3>



<p><a href="#h2-1">What is futures contract</a></p>



<p><a href="#h2-2">Futures trading fee and settlement fee</a></p>



<p><a href="#h2-3">PNL calculations</a></p>



<p><a href="#h2-4">Mark price calculations</a></p>



<p><a href="#h2-5">Risk allocation mechanism</a></p>



<h2 class="wp-block-heading" id="h2-1"><strong>1. What is futures contract</strong></h2>



<p>XT Futures Contracts refer to the derivative of digital assets settled with USDT, BTC, and ETH. The futures contract has no funding fee, and shares the USDT-M/Coin-M margin account with the perpetual contract in the cross-margin mode.</p>



<p>It&#8217;s a contract to buy or sell a particular underlying asset at a predetermined price at a specified time in the future. It&#8217;s different from the perpetual contract in that the futures contract has a delivery date (that the contract will expire). When the futures contract expires, both buyer and seller are obliged to perform the contract and complete the contract no matter what the actual price of the underlying assets is.</p>



<p>If the settlement price is higher than the opening price, the buyer makes a profit; if the settlement price is lower than the opening price, the seller makes a profit.</p>



<p><strong>Instruction of the code of futures contracts:</strong></p>



<p>Take the BTC_USDT0106 this week as an example:</p>



<p>BTC refers to the basic currency of the futures contract; USDT refers to the quote currency of the futures contract; 0106 refers to the expiring date, that is the delivery date; this week refers to a duration of one week, that the contract will expire this week.</p>



<p>It refers to the process for settling the unrealized liquidation or a holding contract on the delivery date.&nbsp;</p>



<p>XT uses the weighted average index 1 hour before settlement as the settlement price, to prevent the risk of instant market manipulations. For more information, please refer to the contract details.</p>



<p><strong>Trading rules:</strong></p>



<p>Instead of a daily basis, XT futures contract will only be settled on the expiring date. No other contracts will be suspended during settlement.&nbsp;</p>



<p>Positions can be closed but not be opened in the last 10 minutes before the delivery.</p>



<p>The settlement time for the weekly contract is 8:00 (UTC), every Friday. The settlement time for the monthly contract is 08:00 (UTC) on the last Friday of the month, and the settlement time for the quarterly contract is 8:00 UTC, the last Friday of that quarter.</p>



<p>Contract trading may be interrupted. The duration of interruption depends on the time taken by the system to conduct the settlement and delivery. The time for interruption and recovery is different among contract varieties, that is, if BTC is still in settlement while ETH is finished, then the recovery of ETH trading is ahead of BTC.</p>



<p>After the delivery, the next week, next month, and next quarter futures inherit the K-line and futures name of the current week, current month, and current quarter for trading.</p>



<p>XT applies the mark price as the basis of liquidation and adopts the ADL and Funding Insurance mechanism like the perpetual contracts so that there will be no loss-sharing.</p>



<h2 class="wp-block-heading" id="h2-2"><strong>2. Futures trading fee and settlement fee</strong></h2>



<p><strong>Futures trading fee rate:</strong></p>



<p>1)&nbsp;Maker: 0.04%, supports VIP rate system.</p>



<p>If the order placed by the maker is not taken immediately, it will be displayed in &#8220;the depth of the market&#8221;, which will increase the depth of the market.</p>



<p>2)&nbsp;Taker: Please refer to the table of tiered fee rates.</p>



<p>Takers trade initiatively with the placed orders and reduce the existing maker orders in the market, thus reducing the depth of the market. If there are no sufficient points, the fee will be charged according to the table of tiered fee rates.</p>



<p>Settlement fee is charged the same as taker&nbsp;<a href="https://www.binance.com/en/fee/deliveryFee">fee</a>&nbsp;for all positions settled on the delivery date.</p>



<p><em>Note: Since there is a delivery date for a futures contract, no funding fee will be charged.</em></p>



<p><strong>The trading fee is calculated as:</strong></p>



<p>Trading Fee = Position Value * Funding Rate</p>



<h2 class="wp-block-heading" id="h2-3"><strong>3. PNL calculations</strong></h2>



<p>The futures contract provided by XT.COM currently supports only contracts with USDT, BTC and ETH settlements.</p>



<p>Like the perpetual contract, the PNL can be realised by operating bullish and bearish according to the market quotation. But there&#8217;s a settlement date for the futures contract that cannot be long-held.</p>



<p>The futures contract information can be viewed in the futures information:</p>



<p>The PNL for a futures contract is calculated using the formula as a perpetual contract.</p>



<ul class="wp-block-list">
<li>Long：Amount (CNT) * Face Value (CNT) * (1 /&nbsp;Avg. Open Price&nbsp;&#8211; 1 /&nbsp;Mark Price)</li>



<li>Short：Amount (CNT) * Face Value (CNT) * (1 /&nbsp;Mark Price&nbsp;&#8211; 1 /&nbsp;Avg. Open Price)</li>
</ul>



<p>The PNL for a futures contract is calculated using the formula as an inverse perpetual contract.</p>



<ul class="wp-block-list">
<li>Long：Amount (CNT) * Face Value (CNT) * (1 / Avg. Open Price &#8211; 1 / Mark Price)</li>



<li>Short：Amount (CNT) * Face Value (CNT) * (1 /&nbsp;Mark Price&nbsp;&#8211; 1 /&nbsp;Avg. Open Price)</li>
</ul>



<h2 class="wp-block-heading" id="h2-4"><strong>4. Mark price calculations</strong></h2>



<p>Traditionally, the price of a quarterly futures contract will converge with its corresponding spot price as the contract expires. As the contract runs down towards expiry, the Mark price will closely reflect spot prices, and the moving average basis component will no longer be part of the Mark price calculation. This means that the Mark price of a futures contract will be computed differently as it reaches the time of expiration.</p>



<p><strong>Before delivery date:</strong></p>



<p>USDT-M futures:</p>



<p>Mark Price = Index Price+ 5-minute Basis Moving Average</p>



<p>5-minute Basis Moving Average = Σ((Bid 1 + Ask 1) / 2 – Index Price), measures every minute in a 5-minute interval</p>



<p>Coin-M futures:</p>



<p>Mark Price = Index Price + 30-minute Basis Moving Average</p>



<p>30-minute Basis Moving Average = Σ((Bid 1 + Ask 1) / 2 – Index Price)，measures every minute in a 30-minute interval</p>



<p><strong>On the delivery date:</strong></p>



<p><strong>1) The time to delivery is greater than 1 hour</strong></p>



<p>USDT-M futures:</p>



<p>Mark Price = Index Price + 5-minute Basis Moving Average</p>



<p>5-minute Basis Moving Average = Σ((Bid 1 + Ask 1) / 2 – Index Price)，measures every minute in a 5-minute interval</p>



<p>Coin-M futures:</p>



<p>Mark Price = Index Price + 30-minute Basis Moving Average</p>



<p>30-minute Basis Moving Average = Σ((Bid 1 + Ask 1) / 2 – Index Price), measures every minute in a 30-minute interval</p>



<p>Please note:</p>



<ul class="wp-block-list">
<li>During the system upgrade or the system down that pending all trading activities, the Mark price of a Quarterly Futures Contract whose time to delivery is greater than 1 hour is calculated as follows:<br><em>Keep the Mark price formula but use the Bid1 and Ask1 at the system stop time to calculate Moving Average (5-minute Basis) until the system is back to normal.</em></li>
</ul>



<p><strong>2) Time to delivery is equal or less than 1 hour</strong></p>



<p>Mark Price = Average Index Price</p>



<p>Average Index Price = (Index Price 1 + Index Price 2 + &#8230; + Index Price n) / n，measures every second in a 1-second interval</p>



<h2 class="wp-block-heading" id="h2-5"><strong>5. Risk allocation mechanism</strong></h2>



<p>Futures contract adopt&nbsp;insurance funds&nbsp;and Auto Deleveraging to allocate and control risk.</p>



<p><strong>Rules for insurance fund:</strong></p>



<p>The insurance fund is used by XT.COM to resist the risk of massive liquidation, mainly composed of the fund provided by XT.COM and&nbsp;the liquidation surplus from the liquidation orders.</p>



<figure class="wp-block-table"><table class="has-fixed-layout"><tbody><tr><td><strong>Types of Futures Contracts</strong></td><td><strong>USDT-M Futures</strong></td><td><strong>Coin-M Futures</strong></td></tr><tr><td>Rules for insurance fund</td><td>For USDT-margined futures, the insurance fund currency for all the contracts is USDT, but the pools are independent of each other.</td><td>For Coin-margined futures, contracts with different underlyings are provided with the insurance funds in the corresponding currencies.</td></tr><tr><td>Example</td><td>ETHUSDT futures (weekly, bi-weekly, monthly, bi-monthly, quarterly, bi-quarterly) has an insurance fund with currency USDT, and so does BTCUSDT futures. But their insurance fund pools are independent of each other and cannot be calculated together.</td><td>BTCUSD futures (weekly, bi-weekly, monthly, bi-monthly, quarterly, bi-quarterly) has an insurance fund with currency BTC, and all the BTCUSD futures contracts with different expiry dates share the same fund.</td></tr></tbody></table></figure>



<p><strong>Auto-Deleveraging (ADL) rules:</strong></p>



<p>Autoーdeleveraging, abbreviated as ADL, refers to a mechanism for liquidation of counterparty positions to control the platform&#8217;s overall risk when extreme market conditions or force majeure lead to insufficient of the insurance fund. After ADL is triggered, the platform will no longer use the method of placing orders on the market and waiting for a suitable price to liquidate or partially liquidate user&#8217;s positions, but directly find the counterparty account with the highest ranking and trade with the mark price at the time. After the transaction is completed, the counterparty position will be closed. The profits from the position will be added to the account balance. When the mechanism is adopted, the clawback will no longer be triggered.</p>



<h3 class="wp-block-heading" id="h_01J67X1Q29QSTKEZNG1S4DSF2S"><strong>About XT.COM</strong></h3>



<p>Founded in 2018,&nbsp;<a href="http://www.xt.com/en">XT.COM</a>&nbsp;now serves nearly 8 million registered users, over 1,000,000+ monthly active users and 40+ million users in the ecosystem. Our comprehensive trading platform supports 800+ high-quality tokens and 1000+ trading pairs. XT.COM&nbsp;<a href="https://www.xt.com/en">crypto exchange</a>&nbsp;supports a rich variety of trading, such as&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt">spot trading</a>,&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt?type=margin">margin trading</a>, and&nbsp;<a href="https://www.xt.com/en/futures">futures trading</a>&nbsp;together with an aggregated&nbsp;<a href="https://www.xt.com/en/nft">NFT marketplace</a>. Our platform strives to cater to our large user base by providing a secure, trusted and intuitive trading experience.</p>


Futures Contract Instruction


<p>COIN-margined contracts are a type of derivatives trading product that offers traders the opportunity to trade with digital assets as collateral. These contracts offer traders a unique set of characteristics, such as leverage and low initial capital requirements, allowing them to capitalize on market volatility without having to put up large amounts of capital. Let’s take a closer look at what makes COIN-margined contracts so attractive to traders.</p>



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<h3 class="wp-block-heading"><strong>Contents of this article:</strong></h3>



<p><a href="#h2-1">1. What are COIN-margined futures?</a></p>



<p><a href="#h2-2">2. What characteristics do COIN-margined contracts offer?</a></p>



<p><a href="#h2-3">3. What are the pros and cons of COIN-margined futures?</a></p>



<p><a href="#h2-4">4. What are the differences between USDT-margined and Coin-margined Futures?</a></p>



<p><a href="#h2-5">5. What are COIN-margined perpetual contracts?</a></p>



<p><a href="#h2-6">6. How to trade COIN-margined perpetual futures on XT Futures?</a></p>



<h2 class="wp-block-heading" id="h2-1">1. What are COIN-margined futures?</h2>



<p><a href="https://www.xt.com/en/futures/trade/btc_usd">Coin-margined futures contracts</a>&nbsp;are a relatively new financial instrument that allow users to speculate on price movements while maintaining the same coin they initially invested with. This type of contract, which is offered by some&nbsp;<a href="https://www.xt.com/en">crypto exchanges</a>, such as&nbsp;<a href="https://www.xt.com/en">XT.COM</a>, allows users to hedge their coin positions without taking physical delivery of any tokens or coins. Coin-margined futures also provide margin currently unavailable with&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt" target="_blank" rel="noreferrer noopener">spot trading</a>&nbsp;and give investors greater ability to short digital coin prices with less capital requirement than spot trading. With coin-margined futures, traders can access markets, stay leveraged and enjoy significant gains in volatile markets even if the asset falls in price.</p>



<h3 class="wp-block-heading" id="h_01J67X1Q28QTP8528DPR2XAFMG"><strong>Terminology Explanation</strong></h3>



<ul class="wp-block-list">
<li><strong>Cross Margin Mode and Isolated Margin Mode:</strong>&nbsp;Cross margin mode and isolated margin mode are two separate ways coin margined futures contracts can be traded in the derivatives market. The main difference between the two is that cross margin mode requires only one unified margin instead of a position-by-position basis, while isolated margin mode has individualized margin amounts that must be managed separately. By using cross margin mode, traders are able to access more leverage than isolated margin as they can use their entire account balance to open positions. Cross margin also reduces the risk of collateral harm from happenings such as unexpected market movements or transaction errors. However, it is important to note that there is more inherent risk involved in cross margining due to its use of overall account margins.</li>



<li><strong>Limit Order, Market Order, and Trigger Order:</strong>&nbsp;A Limit Order is a coin margined futures contact that enables traders to control their coin entry and exit prices. This type of order offers the greatest level of security, allowing traders to set a maximum value they are willing to pay or sell for. If coin prices rise too much, the limit order will not be executed and therefore, traders can avoid paying too high of a price. A Market Order, on the other hand, is an instruction to buy or sell coin at the current market price. As it does not guarantee coin price, trading with Market orders is more risky since coin prices can quickly become volatile if news is released about them unexpectedly. Trigger Orders offer more security than Market Orders. They work by activating in response to coin prices hitting pre-determined levels which ensures that the trade will be successful only when the coin’s trend follows the trader’s predictions.</li>



<li><strong>Fund Fee:</strong>&nbsp;Trading in coin margined futures comes with fund fees that can be a daunting additional charge for traders. Fund fees refer to the fund’s administrative cost and don’t necessarily reflect the profitability of an individual investor. While these fund fees are difficult to avoid, investors should research which fund offerings provide the lowest fund fee rate to ensure they’re getting their money’s worth from the trading experience. Such research can save investors from unnecessary costs associated with coin margined futures trading, further diversifying their potential investments in the futures market.</li>
</ul>



<h2 class="wp-block-heading" id="h2-2">2. What characteristics do COIN-margined contracts offer?</h2>



<p>COIN-margined contracts offer traders the ability to use digital assets as collateral for their trades. This means that traders can effectively use the value of their digital assets (e.g., Bitcoin, Ethereum) as leverage when trading these products. Furthermore, because these products are margined using digital assets, there is no need for initial capital requirements which can be quite high in other markets (e.g., stock markets). This makes it easier for traders to enter into positions with lower risk and capital outlay than if they were trading traditional markets.</p>



<p>In addition, these contracts offer multi-level margin and liquidation systems which provide additional security against potential losses due to price volatility in the underlying asset. They also offer multiple order types including limit orders and market orders which enable users to quickly enter and exit positions based on their desired risk profile. Finally, there is also an integrated stop loss system which ensures that users do not suffer large losses due to extreme price movements in the underlying asset.</p>



<h2 class="wp-block-heading" id="h2-3">3. What are the pros and cons of COIN-margined futures?</h2>



<h3 class="wp-block-heading" id="h_01J67X1Q28HEKNBH9329WJFA8F">Pros of COIN-margined futures</h3>



<p>Trade Profitably in All Market Conditions &#8211; COIN-margined futures are an increasingly popular way to trade in all market conditions due to their low cost and ease of access. With COIN-margined futures, traders have the ability to capitalize on both rising and falling markets and take advantage of short-term price movements or long-term trends with little capital outlay. In addition, traders can benefit from the ability to quickly open and close positions with minimal fees or commissions. This allows them to take advantage of opportunities regardless of market conditions and can provide a steady stream of profits over time.</p>



<p>Hedge Price Risk &#8211; One of the primary advantages of trading COIN-margined futures is that they provide investors with a way to hedge their price risk. By buying and selling contracts at different prices, traders can effectively protect themselves against losses resulting from volatile markets or other external factors such as political instability or natural disasters. Additionally, these types of contracts allow for greater flexibility in terms of when the hedging strategy is implemented, allowing investors to react quickly to changes in market conditions.</p>



<p>Amplify Trading Gains with Leverage &#8211; An additional benefit offered by COIN-margined futures is that they allow traders to amplify their trading gains through the use of leverage. Leverage refers to taking on more risk than would normally be possible with a stock position but allows traders to potentially make larger profits due to higher levels of return achievable on smaller amounts invested. This is particularly appealing for those who are looking for higher returns but are unable or unwilling to commit large sums of capital upfront. It also allows for diversification which reduces overall exposure as well as providing added protection against sudden downturns in price levels. Leveraged trading using COIN-margined futures gives traders the opportunity not only increase their potential profits but also minimize their risk profile by limiting their downside losses.</p>



<h3 class="wp-block-heading" id="h_01J67X1Q29ZPP3JYHC2C3Q6JVD">Cons of COIN-margined futures</h3>



<p>On the downside, since these products are margined using digital assets rather than fiat currency, this means that any profits or losses will be denominated in digital currency &#8211; which may have its own inherent volatility risks associated with it (depending on your local jurisdiction). In addition, since many exchanges offering these products require KYC/AML verification before being able to start trading them &#8211; this could potentially add another layer of complexity and cost if you do not already have an account setup with a compatible exchange prior to opening a position in one of these futures products.</p>



<h2 class="wp-block-heading" id="h2-4">4. What are the differences between USDT-margined and Coin-margined Futures?</h2>



<p>USDT-margined futures and Coin-margined Futures both offer exciting opportunities for traders, but there are some key differences between the two that should be taken into account before trading. Firstly, USDT-margined futures are denominated in the stablecoin Tether (USDT) which means potential losses or gains from positions taken will be settled in USDT. On the other hand, Coin-margined futures use cryptocurrency assets as the underlying collateral which provides an additional layer of risk because it opens traders up to volatility from both currencies involved in the trade. Further, Coin-margined futures allow more options when setting up a margin requirement as you can use either USDT or your preferred cryptocurrency as collateral.</p>



<p>When it is judged that the general trend of the market operation is a bull market, for trend trading users, choosing to do long coin-margined contracts can expand profits; when it is judged that the general trend of market operation is a bear market, for trend trading users, choosing to short USDT-margin contracts can expand profits. When the short-term market is rising, choose to long the coin-margined contract; when the short-term market is falling, choose to short the USDT-margin contract. For coin-margined contracts, the typical user group is hedging users, such as miners, whose characteristics are that they need to hold a certain coin for a long time; for USDT margin contracts, the typical user group is fiat currency-based users, which meet the low transaction costs and simple calculation requirements. All told, each type of margined future has its own considerations before entering a trade and it’s important to be aware of the differences between each option to help make informed decisions when trading.</p>



<h2 class="wp-block-heading" id="h2-5">5. What are COIN-margined perpetual contracts?</h2>



<p><a href="https://www.xt.com/en/futures/trade/btc_usd">Perpetual Coin-Margined Futures</a>&nbsp;is a kind of derivative with no expiration or settlement date. COIN margined perpetual contracts are a type of cryptocurrency derivative that merges the advantages of futures and options. They allow traders to invest with low capital requirements without expiring and also be charged on a round-turn basis (including entry and closing fees). COIN margined perpetual contracts provide simple pricing algorithms based on a composition of prices from selected exchanges allowing competitive commissions when compared to traditional margin products alongside increased leverage. This allows traders to gain significant market exposure while having total control over their portfolios. COIN margined perpetual contracts could be an attractive option for anyone looking to add cryptocurrencies like Bitcoin and Ethereum to their portfolio.</p>



<h2 class="wp-block-heading" id="h2-6">6. How to trade COIN-margined perpetual futures on XT Futures?</h2>



<p>Step 1:</p>



<p><a href="https://www.xt.com/en/accounts/login">Login in</a>&nbsp;your XT account and click “Perp” under “COIN-M Futures” from “Derivatives” section on the navigation to enter the XT futures&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd">COIN-margined perpetual contracts</a>&nbsp;trading page.</p>



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<p>Step 2:</p>



<p>On the futures trading page, you can unlock a world of market intelligence and be in control. Use the real-time price chart to track your selected pair. See orders or review active positions at the bottom display &#8211; then consult any other brokerages making buys/sells in their order book, and view recently completed trades for further knowledge on what’s happening with market values. Finally, you can place trading orders on the right of the screen.</p>



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<p>Step 3:</p>



<p>The coin-margined perpetual contract is a perpetual contract denominated in a certain kind of digital asset (such as BTC or ETH).&nbsp;<a href="https://www.xt.com/en">XT</a>&nbsp;currently offers&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd">BTC/USD perpetual</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/eth_usd">ETH/USD perpetual</a>, and many other perpetual contracts trading pairs. Here, we will use BTC USD perpetual trading as an example.</p>



<p>If you don’t have enough funds in your Futures account, you can easily transfer assets from Spot to Futures account with just one click. If you don’t have funds on the Spot side either, you can&nbsp;<a href="https://www.xt.com/credit/debitCard">buy crypto</a>&nbsp;directly with fiat currency.</p>



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<p>Step 4:</p>



<p>When your futures account has the required funds, you may place your limit order by setting price and the number of contracts you would like to purchase. You may then click “Open Long” or “Open Short” to complete your order.</p>



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<p>Step 5:</p>



<p>XT allows up to 125X leverage on its trading pairs, and your maximum allowable leverage depends on the initial margin and maintenance margins. Traders may adjust their long or short positions using cross-margin mode or isolated-margin mode. For example, if a trader wants to reduce risk by decreasing leveraged hedging from 100X to 20X in an isolated position, they can click “Isolated 100X” then adjusting the figure down below that before hitting “Confirm”. Then the leverage of the position has now been reduced to 20X.</p>



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<p>Step 6:</p>



<p><a href="https://www.xt.com/en/futures">XT Futures</a>&nbsp;supports two different margin modes to accommodate differing trading strategies. They are Cross Margin mode and Isolated Margin mode. By default, all traders start in cross margin mode.</p>



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<p>Step 7:</p>



<p>Trading smartly with XT Futures means understanding when to go long or short on your positions.And set your [Stop profit] and [Stop loss].</p>



<p>Going “long” is the act of buying a contract in anticipation that its price will rise, allowing you to sell it for profit later down the line. Alternatively, going “short” requires predicting future market dips; by selling at current prices and re-buying back later at lower ones &#8211; earning investors even greater profits! With an array of order types available from XT Futures designed specifically around efficient trading strategies &#8211; potential earnings are endless!</p>



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<h3 class="wp-block-heading" id="h_01J67X1Q29QSTKEZNG1S4DSF2S"><strong>About XT.COM</strong></h3>



<p>Founded in 2018,&nbsp;<a href="http://www.xt.com/en">XT.COM</a>&nbsp;now serves nearly 8 million registered users, over 1,000,000+ monthly active users and 40+ million users in the ecosystem. Our comprehensive trading platform supports 800+ high-quality tokens and 1000+ trading pairs. XT.COM&nbsp;<a href="https://www.xt.com/en">crypto exchange</a>&nbsp;supports a rich variety of trading, such as&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt">spot trading</a>,&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt?type=margin">margin trading</a>, and&nbsp;<a href="https://www.xt.com/en/futures">futures trading</a>&nbsp;together with an aggregated&nbsp;<a href="https://www.xt.com/en/nft">NFT marketplace</a>. Our platform strives to cater to our large user base by providing a secure, trusted and intuitive trading experience.</p>


What is COIN-margined Futures and How to Trade COIN-margined Perpetual Futures on XT Futures


<p><a href="https://www.xt.com/en/strategy/futures/grid/btc_usdt">Cryptocurrency futures grid trading</a>&nbsp;is a strategy that uses an algorithm to place multiple buy and sell orders at various intervals. The goal of grid trading is to maximize profits while minimizing risk. It’s one of the most popular strategies used by traders due to its consistency and ability to eliminate emotion from the equation. In this article, we will discuss what crypto futures grid trading is, how it works, who can make use of it, and its rewards.</p>



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<h3 class="wp-block-heading"><strong>Contents of the article:</strong></h3>



<p><a href="#h2-1">What is crypto futures grid trading?</a></p>



<p><a href="#h2-2">How does futures grid trading work?</a></p>



<p><a href="#h2-3">Who can make use of futures grid trading?</a></p>



<p><a href="#h2-4">What are the benefits of using futures grid trading?</a></p>



<p><a href="#h2-5">What are the risks associated with grid trading?</a></p>



<p><a href="#h2-6">How to use grid trading strategy on XT Futures?</a></p>



<h2 class="wp-block-heading" id="h2-1">What is crypto futures grid trading?</h2>



<p><a href="https://www.xt.com/en/strategy/futures/grid/btc_usdt">Futures grid trading bots</a>&nbsp;enable sophisticated investors to take their futures trading capabilities to the next level. The powerful, automated system executes pre-defined trades based on established parameters and a set of orders placed both above and below an asset’s reference market price &#8211; allowing for precise control over risk management without human intervention.</p>



<p>Investors often feel powerful and conflicting emotions when dealing with money, from the exhilaration of a big win to despair over losses. Such strong feelings can interfere with an investor’s strategy but are hard to suppress &#8211; until now! Enter trading bots: computer programs that transact on behalf of investors and offer them leverage in futures markets without feeling any fear or greed themselves. By taking these decisions out of human hands, they help give traders stability through volatile market conditions as emotions stay firmly at bay.</p>



<h2 class="wp-block-heading" id="h2-2">How does futures grid trading work?</h2>



<p><a href="https://www.xt.com/en/strategy/futures/grid/btc_usdt">Futures grid trading</a>&nbsp;is a type of trading that uses bots for automated trades. These bots are programmed to divide large futures contracts into smaller “grids” and execute buy/sell orders at several prices across the grid to get a better price than the traditional market order approach of buying or selling at one set price. The buy/sell orders are placed slightly above and below the current futures contract price, so whatever market direction, there’s usually an opportunity for a profitable outcome. The futures grid trading bot monitors the prices throughout the day and makes new orders as appropriate depending on where prices move. This allows traders to take advantage of small inefficiencies in the futures markets without having to be constantly monitoring them themselves.</p>



<p>For example, using grid trading, a trader could place buy orders for BTC at every 1,000 USDT below the current market price, and sell orders at every 1,000 USDT above the market price.</p>



<figure class="wp-block-table"><table class="has-fixed-layout"><tbody><tr><td>sell</td><td>$22,000</td></tr><tr><td>sell</td><td>$21,000</td></tr><tr><td>current market price</td><td>$20,000</td></tr><tr><td>buy</td><td>$19,000</td></tr><tr><td>buy</td><td>$18,000</td></tr></tbody></table></figure>



<h2 class="wp-block-heading" id="h2-3">Who can make use of futures grid trading?</h2>



<p>Futures grid trading can be used by anyone who has access to reliable trading platforms such as&nbsp;<a href="https://www.xt.com/en/futures">XT Futures</a>. It is suitable for all types of traders from beginners to experienced professionals as it does not require complex technical analysis skills or deep understanding of fundamental analysis techniques like other forms of trading do.</p>



<ol class="wp-block-list">
<li>Short sellers: futures traders are often faced with a daunting decision: go long or short? While the prospect of going short can be extremely enticing, paired with potentially higher profits &#8211; it also holds much greater risk. Enter Futures Grid Trading; by helping to manage and control risks associated with trading one’s asset portfolio, grid trading works best when markets become turbulent and prone to significant volatility.</li>



<li>Margin trading is a great way to potentially amplify returns &#8211; but it also comes with the inherent risk of potential greater losses. For traders looking for profitable, yet secure opportunities however, Futures Grid has them covered; adjustable limits allow investors to customize their experience according to their own specific criteria and reduce exposure at whatever level they see fit.</li>



<li>Tired of non-stop monitoring? Breathe a sigh of relief! Futures Grid Trading on&nbsp;<a href="https://www.xt.com/en">XT.COM</a>&nbsp;liberates traders from having to stay glued to the screen around the clock &#8211; unlocking freedom while still capitalizing on opportunities in an ever-changing crypto market that never sleeps.</li>



<li>Beginners: as a newcomer,&nbsp;<a href="https://www.xt.com/en/strategy/futures/grid/btc_usdt">Futures Grid Trading</a>&nbsp;is your golden ticket – it’s designed with safety in mind so you can gradually get accustomed to market fluctuations. XT Future’s Auto-Mode will set up all the basics for you based on past trades &#8211; no headache or guesswork required!</li>
</ol>



<h2 class="wp-block-heading" id="h2-4">What are the benefits of using futures grid trading?</h2>



<p>Futures grid trading offers numerous advantages:</p>



<ul class="wp-block-list">
<li>Consistency &#8211; Since it automates the entire process traders do not need to worry about making emotional decisions which could lead them astray from a successful trade setup;</li>



<li>Low capital requirements &#8211; Since it does not require large amounts of leverage or margin requirements for each trade, it can be used with very little capital;</li>



<li>Low risk &#8211; As it only involves placing small trades with limited exposure per trade; risk management is built into this type of strategy via stop-losses/take-profits being preset ahead of time, traders do not have worry about taking unnecessary risks which could lead them down a path towards financial ruin if left unchecked;</li>



<li>Automation &#8211; Once parameters have been set up correctly, all trades will execute automatically;</li>



<li>Versatility &#8211; It can be used in any cryptocurrencies pairs etc., allowing traders to diversify their portfolios easily;</li>



<li>Flexibility &#8211; Traders can adjust their strategies based on market conditions without having to manually execute every single trade; Additionally, since multiple orders are placed simultaneously with predetermined amounts, it allows traders the flexibility to take profits quickly should one side move favorably without having to wait until all positions are closed out in order to realize gains (or losses);</li>



<li>Diversified returns &#8211; As profits are taken from both rising and falling markets simultaneously;</li>



<li>Increased efficiency &#8211; Trades are executed quickly allowing traders to take advantage of short-term opportunities quickly before they pass by.</li>
</ul>



<h2 class="wp-block-heading" id="h2-5">What are the risks associated with grid trading?</h2>



<p>Although futures grid trading can be a highly profitable form of futures trading, it also carries with it significant risks which must be understood before engaging in the practice. Grid trading can produce large losses if the margin requirements cannot all be met when the futures position moves against you, or if you are unable to exit your positions at a desired price point. Additionally, futures markets are highly volatile and require traders to constantly adjust their grids as prices move. Finally, futures grid trading is not suitable for traders who lack sufficient capital or experience due to the involved risks associated with fast-changing futures prices.</p>



<h2 class="wp-block-heading" id="h2-6">How to use grid trading strategy on XT Futures?</h2>



<p>Here’s how you can set up your futures grid trading strategy:</p>



<p>1. On the&nbsp;<a href="https://www.xt.com/en/futures">XT.COM Futures</a>&nbsp;page, click [Futures Grid] on the navigation bar.</p>



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<p>2. The next step is to select the contract on which you would like the futures trading bot to be deployed. We will use a&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt">BTCUSDT perpetual contract</a>&nbsp;as an example.</p>



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<p>3. From the right-hand sidebar, you can choose between “Auto” mode (to automatically generate recommended parameters according to technical analysis of the symbol price) and “Manual” mode (to manually customize your grid parameters).</p>



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<p>The Auto option is great for traders of all levels who want to maximize their opportunities with a bot. Whether you’re just getting started or have been trading for years, this feature can help increase your success rate. If you choose “Auto”, you’ll need to decide the following options:</p>



<ul class="wp-block-list">
<li>Order Direction: Neutral, Long, or Short</li>
</ul>



<p>Neutral：Neutral Mode unlocks the potential of range-bound markets. This feature enables traders to take advantage of short and long futures contracts without any existing positions &#8211; simply set your base price, then sit back as buy or sell orders are placed when market prices breach it. With a clever combination of long/short trades based on whether they’re above or below the specified base value, you can confidently lock in maximum profits from sideways movements.</p>



<p>Long: In a volatile market, the long-mode strategy can be an effective tool to capitalize on rising prices. By entering into long positions when they’re formed and capturing profits as soon as possible, traders can take advantage of positive fluctuations in asset price. For instance, a trader who is bullish on Bitcoin might use a long grid strategy on&nbsp;<a href="https://www.xt.com/en/strategy/futures/grid/btc_usdt">BTCUSDT</a>.</p>



<p>Short：For traders looking to take advantage of a bearish market, short mode can be the ideal solution. With this strategy, positions are automatically taken at current prices and profits realized when things start heading south. It’s perfect for those who want to capitalize on falling markets.</p>



<ul class="wp-block-list">
<li>Initial margin: the minimum equity required to open any new position</li>
</ul>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/15597627906329" alt="4-guide-en.png"/></figure>



<p>4. Alternatively, you may choose to specify all the key parameters manually. For Manual option, you’ll need to choose the trading parameters as follows</p>



<ul class="wp-block-list">
<li>Order direction. On the grid trading panel, select the grid direction from three options &#8211; Neutral, Long, or Short.</li>
</ul>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/15597628455833" alt="5-guide-en.png"/></figure>



<ul class="wp-block-list">
<li>Grid type. There are two options for constructing the grid &#8211; arithmetic mode and the geometric mode.</li>
</ul>



<p>Arithmetic mode: Each grid has the same price difference. For example, if the interval is 5,000 USDT. The price of the next order will be 5,000 USDT higher than the previous price.</p>



<p>Geometric mode: Each grid has an equal price difference ratio. For example, if the interval is 17.61%. The price of the next order will be 17.61% higher than the previous price.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/15597624383769" alt="6-guide-en.png"/></figure>



<ul class="wp-block-list">
<li>Price range. Get ready to maximize your earning potential with a 24-hour BTC price prediction strategy. By setting an anticipated range of $20,000 -$30,000 for the next day, you can let the grid trading bot do its magic and automatically place buy orders as prices dip towards $25K and sell off when they begin rising again, in order to make a profit from the price fluctuations.</li>
</ul>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/15597629103513" alt="7-guide-en.png"/></figure>



<ul class="wp-block-list">
<li>Grid count. Futures grid trading allows you to decide exactly how many orders are placed within your desired price range, empowering you with control over how much profit is made from each trade &#8211; whether that’s many smaller profits or fewer larger ones. A larger grid means more trades but smaller profits per trade; alternatively, fewer grids mean bigger returns on each transaction.</li>
</ul>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/15597625201433" alt="8-guide-en.png"/></figure>



<ul class="wp-block-list">
<li>Initial margin. When using futures grid trading strategy on the market, it’s essential to set an initial margin that fits your grids, leverage and price range. For optimal success results, keep in mind that having close-knit grid margins can significantly raise the required initial margin.</li>
</ul>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/15597625598105" alt="9-guide-en.png"/></figure>



<ul class="wp-block-list">
<li>Advanced features. The grid trading bot also comes with enhanced functions that enable you to better manage your positions and risk. Grid trading bot’s Trigger Price function helps set the stage by allowing you to establish predetermined market conditions, so when they are met, the system will jump into action. Get ready for an automated approach that customizes itself according to your personal criteria.</li>



<li>Additionally, you can set a stop-loss for your grid positions. Maximize your gains and safeguard against unexpected losses with stop-loss orders on grid positions! This feature will automatically close out an entire position when the market turns sour, helping to protect you from facing sizable loses.</li>
</ul>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/15597630221849" alt="10-guide-en.png"/></figure>



<h3 class="wp-block-heading">&nbsp;</h3>



<h3 class="wp-block-heading" id="h_01JD8WXVPT6Q0AWA40P6VE1TR0">About XT.COM</h3>



<p>Founded in 2018,&nbsp;<a href="http://www.xt.com/en">XT.COM</a>&nbsp;now serves nearly 8 million registered users, over 1,000,000+ monthly active users and 40+ million users in the ecosystem. Our comprehensive trading platform supports 800+ high-quality tokens and 1000+ trading pairs. XT.COM&nbsp;<a href="https://www.xt.com/en">crypto exchange</a>&nbsp;supports a rich variety of trading, such as&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt">spot trading</a>,&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt?type=margin">margin trading</a>, and&nbsp;<a href="https://www.xt.com/en/futures">futures trading</a>&nbsp;together with an aggregated&nbsp;<a href="https://www.xt.com/en/nft">NFT marketplace</a>. Our platform strives to cater to our large user base by providing a secure, trusted and intuitive trading experience.</p>


What is Futures Grid Trading and How to Do Futures Grid Trading on XT Futures


<figure class="wp-block-image size-large"><img data-recalc-dims="1" loading="lazy" decoding="async" width="1024" height="597" data-attachment-id="2142" data-permalink="https://xtexchangeblog.wpcomstaging.com/en/the-reverse-position-feature-in-futures/xt-futures-cover-4/" data-orig-file="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?fit=1200%2C700&amp;ssl=1" data-orig-size="1200,700" data-comments-opened="1" data-image-meta="{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}" data-image-title="xt-futures-cover" data-image-description="" data-image-caption="" data-medium-file="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?fit=300%2C175&amp;ssl=1" data-large-file="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?fit=1024%2C597&amp;ssl=1" src="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?resize=1024%2C597&#038;ssl=1" alt="xt-futures-cover" class="wp-image-2142" srcset="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?resize=1024%2C597&amp;ssl=1 1024w, https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?resize=300%2C175&amp;ssl=1 300w, https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?resize=768%2C448&amp;ssl=1 768w, https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?w=1200&amp;ssl=1 1200w" sizes="auto, (max-width: 1000px) 100vw, 1000px" /></figure>



<h3 class="wp-block-heading"><strong>Contents of the article:</strong></h3>



<p><a href="#h2-1">What are futures funding rate?</a></p>



<p><a href="#h2-2">Why are futures funding rates important?</a></p>



<p><a href="#h2-3">What is futures insurance fund (risk protection fund)?</a></p>



<p><a href="#h2-4">How does futures insurance fund (risk protection fund）work？</a></p>



<p><a href="#h2-5">What are the differences between index price and mark price?</a></p>



<h2 class="wp-block-heading" id="h2-1"><strong>What are futures funding rate?</strong></h2>



<p><a href="https://www.xt.com/en/futures/information/fund-rate">Crypto funding rates</a>&nbsp;are a dynamic system used by exchanges which determine the funding rate at specific intervals. It works by tracking supply and demand on the exchange and then setting a funding rate to maintain equilibrium. This&nbsp;<a href="https://www.xt.com/en/futures/information/fund-rate">funding rate</a>&nbsp;is then used to automatically balance trader positions by crediting or debiting crypto accounts, depending on the direction of their trades. By doing this, the funding rate helps to ensure fair trading conditions while also preventing potential market manipulations or price distortions due to large trader positions.</p>



<p>Calculating funding rates in&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt">crypto perpetual contracts</a>&nbsp;can be a complex process. This is because funding rates are constantly changing and there are a variety of factors that contribute to these changes. Some of the factors that can affect funding rates include the price of the underlying asset, the interest rate of the funding currency, and the liquidity of the market. funding rates can be either positive or negative, and this will impact whether traders are able to profit from their positions.</p>



<p>On our&nbsp;<a href="https://www.xt.com/en/futures">XT Futures</a>&nbsp;platform, funding rates (highlighted in red) and a countdown to the next funding (highlighted in yellow) are displayed as below. Volatility can cause the prices of a&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt">perpetual contract</a>&nbsp;and its mark to fluctuate considerably. In such cases, traders must pay attention to both spread width and premium level; wide spreads typically mean high premiums while narrow ones come with low premiums. A positive funding rate signals that long positions are at an advantage as their price is higher than the mark’s, resulting in paying for the shorts. The opposite holds true when rates are negative &#8211; it’s then up to short holders’ wallets rather than those of longs’.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/36942056194329" alt=""/></figure>



<h2 class="wp-block-heading" id="h2-2"><strong>Why are futures funding rates important?</strong></h2>



<p>Crypto funding rate plays an important role in the health and stability of the cryptocurrency market. This funding rate is the cost that traders pay one another for using margin trading to trade cryptos with leverage. Essentially, Funding Rates are designed to encourage traders to take positions that keep perpetual contract prices line in with spot markets. Not only does this help keep the markets liquid, it creates more price discovery which can lead to efficient pricing overall &#8211; this helps both buyers and sellers transact at a fair price. Moreover, funding rates prevent large swings or over-leveraging from destabilizing the crypto markets.</p>



<p>Funding rates can mean a world of difference for any trader; high leverage could quickly deplete one’s profits or even lead to liquidation. However, by developing strategies around funding opportunities and taking advantage of range-bound markets, savvy traders may never fall into the ‘high risk’ category again! By monitoring rate fluctuations carefully and acting accordingly with their positions in perpetual contracts versus spot prices, success is almost guaranteed &#8211; no matter how low volatility gets.</p>



<h2 class="wp-block-heading" id="h2-3"><strong>What is futures insurance fund (risk protection fund)?</strong></h2>



<p>Insurance funds are a vital component of&nbsp;<a href="https://www.xt.com/en/futures">crypto derivatives trading</a>, safeguarding traders from disastrous losses. Working like an impenetrable safety net, insurance funds serve to protect bankrupt traders while simultaneously securing the profits of those in-the-black &#8211; offering peace of mind to all involved parties. Not only do they guard against large losses from leveraged positions, but also guarantee full payout to winning traders, acting as a defensive barrier against uncontrollable market forces such as leveraged trade contract loss exceeding initial margins.</p>



<p>The&nbsp;<a href="https://www.xt.com/en/futures/information/risk-fund">XT Risk Protection Fund</a>&nbsp;is an innovative solution to protect traders from costly forced liquidations due to bankrupt counterparties. By using the margin of non-bankrupt users, it offers a buffer against losses when high leverage trades are affected by market volatility or other factors. This fund helps safeguard profitable positions and ultimately gives traders peace of mind in their investments.</p>



<p>You can access the insurance fund (risk protection fund) balance of&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt">BTC/USDT</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/eth_usdt">ETH/USDT</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd">BTC/USD</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/eth_usd">ETH/USD</a>, and all other futures contracts by clicking [Information] &#8211; [Provision of risks] on the&nbsp;<a href="https://www.xt.com/en/futures">XT Futures</a>&nbsp;trading interface. Alternatively, you can directly visit [<a href="https://www.xt.com/en/futures/information/risk-fund">Provision of risks</a>].</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/36942056195097" alt=""/></figure>



<h2 class="wp-block-heading" id="h2-4"><strong>How does futures insurance fund (risk protection fund) work?</strong></h2>



<p>Let’s begin with an examination of how the&nbsp;<a href="https://www.xt.com/en/futures/information/risk-fund">XT Futures provision of risks</a>&nbsp;works:</p>



<p>In uncertain times, the provision of risks (insurance fund) proves its worth by preventing auto-deleverage liquidations. Trader A and Trader B both took a leap of faith by entering into the same&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt">BTC/USDT perpetual futures</a>&nbsp;long position despite varying market conditions.</p>



<p><em>The following events unfold on Trader A’s account:</em></p>



<p><em>1. Trader A goes long BTC/USDT at $8,000, with a liquidation price of $7,700 and a bankruptcy price of $7,600.</em></p>



<p><em>2. As BTC prices plunged beyond $7,700, Trader A enters liquidation and the liquidation engine places an immediate order to sell above $7,600 (the bankruptcy price).</em></p>



<p><em>3. The liquidation order is filled at $7,650, a liquidation fee is charged to Trader A.</em></p>



<p><em>4. The liquidation fee is transferred to the provision of risks.</em></p>



<p><em>Meanwhile, the following events play out in Trader Bs account:</em></p>



<p><em>1. Trader B goes long at $8,000 with a liquidation price of $7,700 and a bankruptcy price of $7,600.</em></p>



<p><em>2. Due to a sudden jump in volatility, the market price is now at $7,550, below the bankruptcy price.</em></p>



<p><em>3.&nbsp;<a href="https://www.xt.com/en/futures">XT Futures</a>&nbsp;takes over the remaining positions from the bankrupt trader whose account is in negative equity.</em></p>



<p><em>4. Through its provision of risks, XT Futures offloads them onto the market progressively.</em></p>



<p><em>5. The liquidation engine places an immediate order to sell and fills the order at $7,500.</em></p>



<p><em>6. As Trader B is already in negative equity, XT Futures’ provision of risks covers the deficit. As a result, ADL has been avoided.</em></p>



<h2 class="wp-block-heading" id="h2-5"><strong>What are the differences between index price and mark price?</strong></h2>



<p>Index Price is the average market price of cryptocurrencies on major spot crypto exchanges in&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt">perpetual futures</a>. It takes into account an anticipatory mechanism to make sure prices swing within a reasonable range, and it’s also the main factor behind determining mark price.</p>



<p>Mark Price refers to an estimated true value of a contract. It is the price used for mark-to-market PnL calculation and platform liquidation; Mark price is also designed to be fair and manipulation resistant.&nbsp;<a href="https://www.xt.com/en/futures">XT Futures</a>&nbsp;uses Mark Price as a trigger for liquidation.</p>



<p>You can access the index price of&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt">BTC/USDT</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/eth_usdt">ETH/USDT</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd">BTC/USD</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/eth_usd">ETH/USD</a>, and all other futures contracts by clicking [Information] &#8211; [Index Price] on the&nbsp;<a href="https://www.xt.com/en/futures">XT Futures</a>&nbsp;trading interface. Alternatively, you can directly visit [<a href="https://www.xt.com/en/futures/information/index">Index Price</a>].</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/36942071981977" alt=""/></figure>



<p>You can access both the&nbsp;<strong>[index price]</strong>&nbsp;and&nbsp;<strong>[mark price]</strong>&nbsp;of&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt">BTC/USDT</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/eth_usdt">ETH/USDT</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd">BTC/USD</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/eth_usd">ETH/USD</a>, and all other futures contracts from futures trading interface.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/15800099720601" alt="index-mark-price-en.png"/></figure>



<h3 class="wp-block-heading" id="h_01J6AECBDFVHNEY4M3Q6QJ08ZW">About XT.COM</h3>



<p>Founded in 2018, XT.COM now serves nearly 8 million registered users, over 1,000,000+ monthly active users and 40+ million users in the ecosystem. Our comprehensive trading platform supports 800+ high-quality tokens and 1000+ trading pairs. XT.COM crypto exchange supports a rich variety of trading, such as spot trading, margin trading, and futures trading together with an aggregated NFT marketplace. Our platform strives to cater to our large user base by providing a secure, trusted and intuitive trading experience.</p>


What Are Futures Funding Rate, Insurance Fund, and Index Price?


<p>Quarterly futures contracts are an important tool for traders looking to capitalize on short-term price movements in a given market. In this article, we’ll provide an overview of quarterly futures and explore the differences between these contracts and perpetual futures. With this knowledge, traders can decide which type of contract is better suited to their trading style and goals.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/16031595143321" alt="quarterly-futures-contract-cover-en.png"/></figure>



<h3 class="wp-block-heading">Contents of the article:</h3>



<p><a href="#h2-1">What are quarterly futures contracts?</a></p>



<p><a href="#h2-2">How do quarterly futures contracts work?</a></p>



<p><a href="#h2-3">What are the benefits of quarterly contracts?</a></p>



<p><a href="#h2-4">What are the differences between quarterly futures and perpetual futures?</a></p>



<p><a href="#h2-5">How to trade quarterly futures contracts on XT.COM Futures</a></p>



<h2 class="wp-block-heading" id="h2-1">What are quarterly futures contracts?</h2>



<p><a href="https://www.xt.com/en/futures/trade/btc_usd_quarter">Quarterly futures contracts</a>&nbsp;are derivatives that provide holders the ability to enter into a contract with the seller to buy or sell an asset at a particular future date quarterly. Unlike other longer-term futures contracts, quarterly futures contracts are typically used to lock in pricing and avoid price fluctuations in more volatile markets. They function similarly to&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd">perpetual futures contracts</a>, but represent smaller and more frequent transactions, allowing traders better market access while quickly capitalizing on opportunities they otherwise may not have had without quarterly contracts.</p>



<p>Quarterly futures contracts provide investors with access to markets and investments they would not normally have access to, as well as providing protection against volatile market conditions. While quarterly futures contracts can be highly lucrative, as with any investment there is always a risk involved and therefore it is important for investors to educate themselves about the market and the specific quarterly futures contract before making any decisions.</p>



<h2 class="wp-block-heading" id="h2-2">How do quarterly futures contracts work?</h2>



<p>Quarterly futures are a popular form of investment, with an expiration date that must be observed. These contracts expire on the last Friday of every quarter, ensuring an easy way for investors to keep track and plan their strategies accordingly; just like any other standard future contract. A Bi-quarterly futures is generated on the third Friday from the last of each quarter month (March, June, September, December) and expires on the last Friday of a half-year. The most recent&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt_quarter">BTCUSDT Quarterly 0331</a>&nbsp;&#8211; will settle on March 31st 2023 in cash (USD) allowing traders who have acquired positions before expiry ample time &#8211; as well as security &#8211; when preparing for settlement. The most recent&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd_bi-quarter">BTCUSD quarterly 0630</a>&nbsp;&#8211; will settle on June 30th 2023. Alternatively, the contacts can also have physical settlement, which means traders can literally buy one bitcoin for the predetermined price.</p>



<p>If the trade isn’t going as planned, traders have the choice of closing their positions (long or short) before expiration. The resulting profits and losses (PnL) would be calculated by comparing the opening price to that at closure. For example, invest in a&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt_quarter">BTCUSDT quarterly 0331</a>&nbsp;and you’ll be set for the quarter. By buying one BTCUSDT quarterly 0331 contract at $30,000 now, you’ll lock-in that price come the expiry date on 31 March &#8211; regardless of how much Bitcoin decides to fluctuate before then. The contract will be settled on March 31 and the traders will buy one bitcoin for $30,000.</p>



<h2 class="wp-block-heading" id="h2-3">What are the benefits of quarterly contracts?</h2>



<p><a href="https://www.xt.com/en/futures/trade/btc_usd_quarter">Quarterly futures contracts</a>&nbsp;can be beneficial for traders because they provide flexibility and opportunities to trade at regular intervals. Unlike other futures contracts, quarterly futures have a particular expiration date that is quarterly rather than the typical yearly expiration. This means that traders are able to plan their trading strategies around a quarterly structure instead of waiting a long-term before they can make changes. Quarterly futures offer more frequent price discovery events which enables traders to react to market forces in a timely fashion and adjust their trading positions accordingly.</p>



<p>Quarterly contracts also offer liquidity and lower margin requirements, as well as harmonized global standards for pricing and risk management. This can make quarterly contracts an attractive option for capitalizing on opportunities in the global market. In addition, quarterly futures provide more liquidity opportunities as trades can be made on each quarter’s delivery so there is often a greater number of participants in the market compared with perpetual contracts. Overall,&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd_quarter">delivery futures</a>&nbsp;are appealing for those looking for short-term trading opportunities as well as those who prefer frequent trading and renewed exposures over longer durations.</p>



<h2 class="wp-block-heading" id="h2-4"><a></a>What are the differences between quarterly futures and perpetual futures?</h2>



<h3 class="wp-block-heading" id="h_01JD8XAXWPDFE1GVB7GAPP5S94">Expiration Date</h3>



<p>The most obvious difference between these two types of futures is their expiration date.&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt_quarter">Quarterly delivery futures</a>&nbsp;are designed to expire at a certain point in time &#8211; usually on the last Friday of the quarter. This means that if you hold a position in a quarterly future until its expiration date, your position will be automatically closed out at the prevailing market price. On the other hand,&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt">perpetual futures</a>&nbsp;never expire; instead they use a rollover system to extend positions that have been open for longer than 8 hours (or 16 hours in some cases).&nbsp;</p>



<h3 class="wp-block-heading" id="h_01JD8XAXWPY4X1JRER35ZYJK1K">Rollover Process</h3>



<p><a href="https://www.xt.com/en/futures/trade/btc_usd_quarter">Quarterly futures trading</a>&nbsp;does not require any type of rollover process because they expire on their own accord after 3 months. However, with&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd">perpetual futures trading</a>&nbsp;there is an additional process called “rollovers” which keep positions open beyond 8 or 16 hours. These rollovers involve transferring part (or all) of your position from one expiry date to another one month later. This allows traders to keep their positions open for extended periods of time without having to close them out prior to the expiry date.</p>



<h3 class="wp-block-heading" id="h_01JD8XAXWQ3CFKCMA77HNNVAVT">Funding Fee</h3>



<p>Another key difference between these two types of contracts lies in their funding fee structure.&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd_quarter">Quarterly futures contracts</a>&nbsp;typically do not include any kind of funding fee as they are designed to be held until their expiration date and then liquidated at that point in time. However,&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd">perpetual futures contracts</a>&nbsp;do include a funding fee which is charged every 8-hours or 16-hours depending on the contract specification; this fee helps incentivize market makers who provide liquidity by offsetting some of their risk exposure.&nbsp;&nbsp;</p>



<h3 class="wp-block-heading" id="h_01JD8XAXWQJ9SN6GHPHKS87AA8">BTC vs USDT Margined</h3>



<p>Both quarters and perpetuals can be margined either in Bitcoin (BTC) or Tether (USDT). While both BTC and USDT margins offer similar levels of liquidity and exposure, there are some important differences between them;&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd">BTC margin</a>&nbsp;offers more potential profit potential due to its higher volatility while&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt">USDT margin</a>&nbsp;offers more stability due to its lower volatility but also lower potential profits compared to BTC margin trades.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>



<h3 class="wp-block-heading" id="h_01JD8XAXWQ3XYCJ4S02NWY28TF">Trading Strategy</h3>



<p>Finally, it’s important to consider how these different types of contracts fit into your overall trading strategy as well as what type of risk profile you prefer when selecting one over the other. If you prefer shorter-term trades with less volatility and risk then quarterly contracts may be better suited for you; however if you prefer more flexibility in terms of duration and exposure then perpetuals may be the better choice for you given their higher leverage options and ability to rollover positions indefinitely.</p>



<h2 class="wp-block-heading" id="h2-5">How to trade quarterly futures contracts on XT.COM Futures</h2>



<p>Step 1:&nbsp;<a href="https://www.xt.com/en/accounts/login">Login in</a>&nbsp;your XT.COM account and click “Delivery” under “COIN-M Futures” from “Derivatives” section on the navigation to enter the XT futures&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd_quarter">COIN-margined delivery contracts</a>&nbsp;trading page.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/16031600087705" alt="1-step-en.png"/></figure>



<p>Step 2: On the futures trading page, you can place trading orders on the right of the screen.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/16031648670873" alt="2-step-en.png"/></figure>



<p>Step 3: The coin-margined delivery contract is a quarterly or bi-quarterly contract denominated in a certain kind of digital asset (such as BTC or ETH).&nbsp;<a href="https://www.xt.com/en">XT.COM</a>&nbsp;currently offers&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd_quarter">BTC/USD quarterly</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/eth_usd_quarter">ETH/USD quarterly</a>, and many other&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usd_quarter">delivery contracts</a>&nbsp;trading pairs. Here, we will use BTC USD quarterly trading as an example.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/16033362070937" alt="3-step-en.png"/></figure>



<p>Step 4: If you don’t have enough funds in your Futures account, you can easily transfer assets from Spot to Futures account with just one click. If you don’t have funds on the Spot side either, you can&nbsp;<a href="https://www.xt.com/credit/debitCard">buy crypto</a>&nbsp;directly with fiat currency.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/16033362588825" alt="4-step-en.png"/></figure>



<p>Step 5: When your futures account has the required funds, you may place your limit order by setting price and the number of contracts you would like to purchase. You may then click “Open Long” or “Open Short” to complete your order. A long position means you expect the market to rise, while a short position means you expect it to fall.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/16033427431833" alt="5-step-en.png"/></figure>



<p>Step 6: You can modify leverage of long or short positions using cross-margin mode or isolated-margin mode.&nbsp;<a href="https://www.xt.com/en/futures">XT Futures</a>&nbsp;supports two different margin modes to accommodate differing trading strategies. They are Cross Margin mode and Isolated Margin mode. By default, all traders start in cross margin mode.</p>



<ul class="wp-block-list">
<li>Isolated Margin: Isolated Margin allows traders to manage their risk in a more efficient way by allowing only part of their position to be automatically liquidated if there is a significant price movement. Isolated Margin also provides traders plenty of liquidity while they maintain open positions, allowing them to make more strategic decisions when the markets move quickly.</li>



<li>Cross Margin: Cross Margin is an optional margin mode that reduces the margin requirement for traders, allowing them to take on larger positions without having to deposit extra funds into their account. Cross Margin works by allowing traders to spread their total account collateral over all of the positions held in the same contract. Therefore, Cross Margin ensures that traders have adequate margin levels across all positions in a particular contract and can allow them to increase their position size if desired.</li>
</ul>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/16031601762969" alt="6-step-en.png"/></figure>



<p>Step 7:&nbsp;You can choose your order type using limit order, market order or trigger order.</p>



<ul class="wp-block-list">
<li>A limit order lets you set a minimum price for the order to execute</li>



<li>A market order will execute immediately at the current best available market price</li>



<li>A trigger order lets you specify the stop price an order should execute. If the market order price falls to your stop price, your order will trigger a sell</li>
</ul>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/16031653128089" alt="9-step-en.png"/></figure>



<p>Each order you place specifies a Time in Force (TIF) along with the Order Type. TIF indicates how long the order will remain active before it is executed or before it expires. Available TIF options may change, depending on the order type, exchange and contract.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/16031703770777" alt="10-step-en.png"/></figure>



<p>Step 8:&nbsp;During the futures trading, if you need to perform some basic arithmetic, you can use the provided calculator function on the futures trading page.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/16031650306585" alt="7-step-en.png"/></figure>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/16031637968409" alt="8-step-en.png"/></figure>



<h2 class="wp-block-heading" id="h2-6">Final Thoughts</h2>



<p>In conclusion, understanding the differences between quarterly futures and perpetual futures can help traders determine which type of contract best suits their individual needs when it comes to trading derivatives markets like those offered through&nbsp;<a href="https://www.xt.com/en/futures">XT futures exchange</a>. While both types offer advantages depending upon individual preferences such as shorter expiration times for those seeking shorter commitments or margin trading capabilities for those looking leverage trades with increased potential profits but also higher risk profiles; understanding how each works before entering any position will ensure that you make informed decisions when entering into any kind of derivative contract regardless if its based off quarters or perpetuity!</p>



<h3 class="wp-block-heading" id="h_01JD8XAXWQSEHWPRCG06P2V5YT">About XT.COM</h3>



<p>Founded in 2018, XT.COM now serves nearly 8 million registered users, over 1,000,000+ monthly active users and 40+ million users in the ecosystem. Our comprehensive trading platform supports 800+ high-quality tokens and 1000+ trading pairs. XT.COM crypto exchange supports a rich variety of trading, such as spot trading, margin trading, and futures trading together with an aggregated NFT marketplace. Our platform strives to cater to our large user base by providing a secure, trusted and intuitive trading experience.</p>


What Are Quarterly Futures and What Are the Differences Between Quarterly Futures and Perpetual Futures?


<figure class="wp-block-image size-large"><img data-recalc-dims="1" loading="lazy" decoding="async" width="1024" height="597" data-attachment-id="2142" data-permalink="https://xtexchangeblog.wpcomstaging.com/en/the-reverse-position-feature-in-futures/xt-futures-cover-4/" data-orig-file="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?fit=1200%2C700&amp;ssl=1" data-orig-size="1200,700" data-comments-opened="1" data-image-meta="{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}" data-image-title="xt-futures-cover" data-image-description="" data-image-caption="" data-medium-file="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?fit=300%2C175&amp;ssl=1" data-large-file="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?fit=1024%2C597&amp;ssl=1" src="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?resize=1024%2C597&#038;ssl=1" alt="xt-futures-cover" class="wp-image-2142" srcset="https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?resize=1024%2C597&amp;ssl=1 1024w, https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?resize=300%2C175&amp;ssl=1 300w, https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?resize=768%2C448&amp;ssl=1 768w, https://i0.wp.com/xtexchangeblog.wpcomstaging.com/wp-content/uploads/2024/12/xt-futures-cover.jpeg?w=1200&amp;ssl=1 1200w" sizes="auto, (max-width: 1000px) 100vw, 1000px" /></figure>



<h3 class="wp-block-heading" id="h_01JA8EGN66HXDKEC1K7VQPFJ03"><strong>Content of this article:</strong></h3>



<p><a href="#h2-1">What is XT Futures One-Click Reverse?</a></p>



<p><a href="#h2-2">How to Use One-Click Reverse on the Web?</a></p>



<p><a href="#h2-3">How to Use One-Click Reverse on the App?</a></p>



<h2 class="wp-block-heading" id="h2-1">What is XT Futures One-Click Reverse?</h2>



<p>The XT Futures One-Click Reverse feature allows users to quickly close their current positions at the best market price during a market reversal and simultaneously open a reverse position with the same leverage, same contract, and same quantity. This allows a smooth transition between long and short positions.</p>



<ol class="wp-block-list">
<li>The user’s current position will first be closed at the market price, and a reverse position of the same quantity will be opened at the market price. If the funds are insufficient to open a position of the same quantity, the reverse position cannot be opened. Due to factors like margin and market conditions, the reverse operation is not guaranteed to be 100% successful.</li>



<li>The One-Click Reverse feature supports both perpetual and delivery futures contracts.</li>



<li>Pending orders during reversal: If there are any pending orders associated with the current position, these will be canceled before the position is closed at market price, and then the entire position will be closed.</li>
</ol>



<h2 class="wp-block-heading" id="h2-2">How to Use One-Click Reverse on the Web?</h2>



<p>On the XT Futures page, go to&nbsp;<strong>Current Position</strong>, find the contract order you want to operate, and click the&nbsp;<strong>Reverse</strong>button to perform the action.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/38875905494041" alt=""/></figure>



<h2 class="wp-block-heading" id="h2-3">How to Use One-Click Reverse on the App?</h2>



<p>On the XT Futures page, go to&nbsp;<strong>Position</strong>, find the contract order you want to operate, and click the&nbsp;<strong>Reverse</strong>&nbsp;button to perform the action.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/38875899620377" alt=""/></figure>



<h3 class="wp-block-heading" id="h_01JD8TQTW7HK07C48S5W65QGT4"><strong>About&nbsp;</strong><strong>XT.COM</strong></h3>



<p>Founded in 2018,&nbsp;<a href="http://www.xt.com/en">XT.COM</a>&nbsp;now serves nearly 8 million registered users, over 1,000,000+ monthly active users and 40+ million users in the ecosystem. Our comprehensive trading platform supports 800+ high-quality tokens and 1000+ trading pairs. XT.COM&nbsp;<a href="https://www.xt.com/en">crypto exchange</a>&nbsp;supports a rich variety of trading, such as&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt">spot trading</a>,&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt?type=margin">margin trading</a>, and&nbsp;<a href="https://www.xt.com/en/futures">futures trading</a>&nbsp;together with an aggregated&nbsp;<a href="https://www.xt.com/en/nft">NFT marketplace</a>. Our platform strives to cater to our large user base by providing a secure, trusted and intuitive trading experience.</p>


The Reverse Position Feature in Futures


<p>Are you wondering how to accurately predict Bitcoin’s price movements? Are you looking for a way to get an edge on the crypto market and capitalize on your investment strategies? Cryptocurrency technical analysis can help you do just that, giving you insight into short-term trends and insights that could be invaluable in timing and preventing losses. </p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/18569796503961" alt="TA-cover.jpeg"/></figure>



<p>In this article, we’ll discuss what cryptocurrency technical analysis is, how it works and how to do technical analysis when trading with Bitcoin. Whether you’re a beginner trader or savvy investor, learning about technical indicators can give you the knowledge needed to take control of your portfolio.</p>



<h3 class="wp-block-heading">Contents of the article:</h3>



<p><a href="#h2-1">What is technical analysis?</a></p>



<p><a href="#h2-2">Three basic assumptions behind technical analysis</a></p>



<p><a href="#h2-3">Charts and support/resistance levels for crypto assets</a></p>



<p><a href="#h2-4">Technical indicators for crypto assets</a></p>



<p><a href="#h2-5">Today’s Bitcoin technical analysis</a></p>



<p><a href="#h2-6">Limitations of technical analysis</a></p>



<h2 class="wp-block-heading" id="h2-1">What is technical analysis?</h2>



<p>Cryptocurrency, like any other market asset, is influenced by external factors that can lead to fluctuating prices. To help traders make informed decisions, technical analysis is a tool that is used to predict price movements. Technical analysis is the study of past market trends to identify patterns and signals that could suggest the future direction of an asset’s price. Cryptocurrency technical analysis involves analyzing market charts and applying various technical indicators to better understand market trends and predict future behavior. By using technical analysis effectively, traders can minimize their risks and make more informed decisions that lead to profitable investments in the&nbsp;<a href="https://www.xt.com/en/market">cryptocurrency market</a>.</p>



<h2 class="wp-block-heading" id="h2-2">Three basic assumptions behind technical analysis</h2>



<p>Technical analysis is an approach to studying market behavior that is built around three fundamental assumptions.</p>



<p>First, the market discounts everything, meaning that all information necessary to determine a cryptocurrency’s price is already reflected in the current market price. As a result, technical analysts look primarily at price and volume data, as they believe these two variables capture all available information about the market.</p>



<p>Second, prices always move in trends, meaning that markets tend to follow a pattern of moving up, down, or sideways for extended periods of time. TA experts assume that regardless of the time frame, price movements always are part of a trend. Once the trend is formulated, prices move in the same direction. Finally, history tends to repeat itself, meaning that past patterns and trends are likely to recur in the future. Market participants usually exhibit consistent reactions to market happenings over time. Even though some chart patterns formed a long time ago, they are still considered important as they could happen again.</p>



<h2 class="wp-block-heading" id="h2-3">Charts and support/resistance levels for crypto assets</h2>



<h3 class="wp-block-heading" id="h_01JD8TPK4YQE44PNDKZWBT0MX9">Line Charts</h3>



<p>Line charts are the most basic type of chart used in technical analysis. They usually use only one data point: the closing price. To identify the trend, a series of closing prices is plotted on a chart and joined to form a line.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/18569845869593" alt="TA-line-chart.png"/></figure>



<h3 class="wp-block-heading" id="h_01JD8TPK4YYZB94SSEXR2PK3HH">Candlestick Charts</h3>



<p>Candlestick charts have become an indispensable tool in the world of trading as they offer an incredible insight into the movements of crypto assets. These charts, which originated in Japan, offer a visual representation of trading that allows traders and investors to quickly understand trends and make better investment decisions. Candlestick charts display the open, high, low, and close prices of an asset, and the shape of the candlestick body and wick reveals information about the market sentiment and the overall strength of buyers and sellers.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/18569845496473" alt="TA-candle-chart-1.png"/></figure>



<p>Candlesticks are popular among cryptocurrency traders and are used in the same way as traders use them for other securities. For short-term traders, there are charting services that will provide time frames from intervals of as little as one-minute charts and various intervals up to daily charts. For the longer-term trader, daily, weekly and monthly charts are useful.</p>



<p>Each candle has two parts: the body, and the shadows or “wicks”. The body indicates the difference between the opening and closing price of the crypto coin in a time interval. The top wick shows a cryptocurrency’s highest price during a time interval. The bottom wick reveals the lowest price of the crypto asset in a time interval.</p>



<p>A long wick at the top of a candle’s body can, for example, suggest traders are taking profits and a sell-off may be occurring soon. On the contrary, a long wick at the bottom could mean traders are buying the asset every time the price drops.</p>



<p>Similarly, a candlestick in which the body occupies almost all of the space and has very short wicks, may mean that there’s strong bullish sentiment if it’s green or strong bearish sentiment if it’s red. On the other hand, a candlestick with almost no body and long wicks signals that neither buyers nor sellers are in control.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/18569796083609" alt="TA-candle-chart.png"/></figure>



<h3 class="wp-block-heading" id="h_01JD8TPK4ZP8QTW9GAG5VZT0PA">Support and Resistance Levels</h3>



<p>Support and resistance levels are important levels recognizable on a chart, where supply and demand meet. Learning to recognize these levels can help the trader with successful entries and exits.</p>



<p>Support levels: If the level of demand matches supply for a crypto asset or other security, it stabilizes price and creates a support level. Traders test this level multiple times before entering long trades. But, if the support level breaks after multiple tests, the prices will move lower until a new support level is determined. Then, prior support becomes the new resistance level, making or breaking trading opportunities.</p>



<p>Resistance levels: When supply meets demand, resistance levels are formed. During uptrends, prices escalate until demand can no longer exceed supply, causing more traders to sell and creating a ceiling on prices. Often, these levels are tested multiple times, and successful tests indicate traders&#8217; comfort in shorting the security. On occasion, prices break resistance and continue to rise until they reach a new level of resistance. Typically, the old resistance level becomes the new support level just like in the case of support.</p>



<h2 class="wp-block-heading" id="h2-4">Technical indicators for crypto assets</h2>



<h3 class="wp-block-heading" id="h_01JD8TPK4ZV05DSS2VAS39GQY7">Trend lines</h3>



<p>By studying trend lines, investors can gain valuable insight into the direction of a particular asset&#8217;s price movements. Upward trends indicate that demand for the asset is growing, potentially leading to higher prices. Conversely, downward trends suggest a decrease in demand, which could signify a good time to sell. Consolidation trends, on the other hand, point to a period of stability where the asset’s value is neither rising nor falling sharply.</p>



<h3 class="wp-block-heading" id="h_01JD8TPK4Z3XCXNRS7CJXB38Q3">Moving average</h3>



<p>Moving averages calculate the average price of a digital asset over a specific timeframe, such as the last 50 or 200 days. By comparing the current price to the moving average, analysts can determine whether a cryptocurrency is overbought or oversold, indicating a potential buying or selling opportunity. This can be especially useful in volatile markets, where quick decisions are crucial.</p>



<p>The most commonly used moving averages are used for 10, 20, 50, 100, or even 200-day periods. These make market trends more visible, with a 200-day moving average being considered a support level during an uptrend, and a resistance level during a downtrend.</p>



<h3 class="wp-block-heading" id="h_01JD8TPK4ZT26E9XDZ2G0HT0YA">Moving average convergence divergence (MACD)</h3>



<p>The Moving Average Convergence-Divergence (MACD) Indicator is a popular technical analysis tool that traders use to identify potential trend reversals and buy-sell signals in different securities. It consists of two lines, the MACD line, and the Signal line, both of which are derived from exponential moving averages (EMA) of different periods. When the MACD line crosses above the Signal line, it generates a bullish signal, while a crossover below the Signal line is considered bearish. The distance between the two lines also indicates the strength of the trend at any given point in time. The MACD Indicator is a versatile tool that can be customized to suit different trading styles and time frames.</p>



<p>By showing the relation between two moving averages of an asset’s price, it reflects the momentum of trends. MACD has three main components, i.e.</p>



<ul class="wp-block-list">
<li>MACD = 12-period EMA &#8211; 26-period EMA</li>



<li>Signal Line = A 9-period EMA of the MACD.</li>



<li>MACD Histogram = MACD &#8211; Signal Line</li>
</ul>



<p>Note EMA &#8211; Exponential Moving Average i.e. a moving average type that prioritizes the most recent data points.</p>



<p>MACD is dependent on moving averages i.e. past prices which means the indicator is lagging. However, given its strong fundamentals, the accuracy of the MACD indicator is high and reliable.</p>



<p>General interpretations of the MACD indicator are as follows:</p>



<ul class="wp-block-list">
<li>Positive MACD = Increasing momentum of an uptrend (price rise),</li>



<li>Negative MACD = Increasing momentum of a downtrend (price fall),</li>



<li>If the MACD increases and crosses above the Signal Line, it is a bullish crossover,</li>



<li>If the MACD falls below the Signal Line, it is a bearish crossover.</li>
</ul>



<p>By coupling trend and momentum, MACD has evolved into a popular, yet reliable trading indicator. Also, it provides enough flexibility because MACD can be applied to price charts of different time frames.</p>



<h3 class="wp-block-heading" id="h_01JD8TPK4ZZ0ZSK43EAVTG760C">On-balance volume indicator (OBV)</h3>



<p>On-Balance Volume, or OBV for short, is a popular technical analysis tool used to track the flow of volume in the cryptocurrency market. This indicator is based on the idea that when volume increases, prices are likely to follow suit, and that when volume decreases, prices may decrease as well. Essentially, the OBV helps traders identify trends and price movements by analyzing the total volume of buy and sell orders. When the volume on up days outpaces volume on down days, the OBV rises. When the volume on down days outpaces the volume on up days, the OBV falls. By providing a clearer picture of supply and demand, the OBV can be an essential tool for traders looking to make informed buying and selling decisions in the highly volatile crypto market.</p>



<h3 class="wp-block-heading" id="h_01JD8TPK4Z0CGSGCB45PSVGJ3G">Relative Strength Index (RSI)</h3>



<p>The Relative Strength Index, or RSI, is a popular technical analysis tool used by traders and investors to measure whether a security, such as a stock or cryptocurrency, is overbought or oversold. The RSI formula calculates the strength of price movements over a set period of time, typically 14 days, and provides a reading between 0 and 100. A reading above 70 is generally considered overbought, indicating that the security may be due for a price correction, while a reading below 30 is considered oversold, indicating that the security may be undervalued.</p>



<h3 class="wp-block-heading" id="h_01JD8TPK4ZXCJ5PW1SXYEJSDXY">Bollinger bands</h3>



<p>Bollinger bands are represented on a chart by a moving average line and two outer bands that are calculated from the standard deviation of price movements. As the price of the cryptocurrency fluctuates, the Bollinger Bands will adjust accordingly and provide valuable insights into potential buying and selling opportunities. The bands that often will encompass price expand and contract as volatility expands, and decreases are based on +2 standard deviations above the center line and -2 standard deviations below the center line.</p>



<p>The interpretation of price action depends on the trading environment. In bullish conditions, it is often more profitable to trade in the direction of a price breakout. In bearish markets, short in the direction of the breakout. The idea behind Bollinger Bands is that prices eventually will return to the mean. Periods of high volatility eventually will become periods of low volatility</p>



<h2 class="wp-block-heading" id="h2-5">Today’s Bitcoin technical analysis</h2>



<p>Funding rates remain positive in crypto markets</p>



<p><a href="https://www.xt.com/en/futures/trade/btc_usdt">Bitcoin perpetual futures</a>&nbsp;funding rates remain positive, a sign that sentiment in the market remains positive for the moment.</p>



<figure class="wp-block-image"><img decoding="async" src="https://xtsupport.zendesk.com/hc/article_attachments/18569845126681" alt="TA-bitcoin.png"/></figure>



<p><a href="https://www.xt.com/en/futures/information/fund-rate">Perpetual funding rates</a>&nbsp;represent payments within the futures markets between participants who are long or short the asset. When funding rates are positive, holders of long positions pay a fee to holders of short positions. When funding rates are negative, the opposite is the case.</p>



<p>The interpretation is that funding rates can often indicate bullish or bearish sentiment, with the former represented by positive rates, and the latter represented by negative ones.</p>



<p>For bitcoin funding rates have been positive in 8 of the most recent 10 trading days. Ether by comparison has shown positive funding rates in 7 of the most recent days, declining to zero 3 times, but not falling below zero since April 6.</p>



<p>Data from Cointelegraph Markets Pro and TradingView showed&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt">BTC/USD</a>&nbsp;reaching $27,666 on Bitstamp.</p>



<p>Bitcoin on Bitstamp held strength on hourly timeframes after a weekly close just below the $27,000 mark.</p>



<p>With United States equities in a tight range on the day, crypto analysts looked for cues over where markets might go next.</p>



<p>For Michaël van de Poppe, founder and CEO of trading firm Eight, the outlook was good.</p>



<p>“Bitcoin breaks upwards and tests $27,600. Good signs,” he summarized.</p>



<p>“Weekly timeframe; Holding 200 MA and EMA. I think we’re continuing towards $38,000-42,000 from here.”</p>



<p>Van de Poppe referenced the 200-week moving average and exponential moving average, these seeing a retest late last week after functioning as support for two months.</p>



<p>XT.COM&nbsp;<a href="https://www.xt.com/en">crypto exchange</a>&nbsp;supports a rich variety of bitcoin trading such as&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt">bitcoin spot trading</a>&nbsp;(<a href="https://www.xt.com/en/trade/btc_usdt">BTC/USDT</a>),&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt?type=margin">bitcoin margin trading</a>,&nbsp;<a href="https://www.xt.com/en/trade/btc3l_usdt">bitcoin ETF trading</a>, and&nbsp;<a href="https://www.xt.com/en/futures">bitcoin futures trading</a>&nbsp;including&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt">bitcoin perpetual contracts</a>,&nbsp;<a href="https://www.xt.com/en/futures/trade/btc_usdt_quarter">bitcoin quarterly contracts</a>, and&nbsp;<a href="https://www.xt.com/en/strategy/futures/grid/btc_usdt">bitcoin futures grid trading</a>.</p>



<h2 class="wp-block-heading" id="h2-6">Limitations of technical analysis</h2>



<p>As with any type of financial analysis, technical analysis for cryptocurrency has its limitations. While it can be a useful tool for predicting price movements and identifying trends, it is important to remember that this method relies solely on historical price data. This means that unforeseen events, such as major news events or changes in regulations, can cause sudden and dramatic shifts in the market that may not have been predicted by technical analysis alone. Additionally, the cryptocurrency market is still relatively new and rapidly evolving, which can make it difficult to accurately apply traditional technical analysis methods. As such, it is important for traders to keep these limitations in mind and to not rely exclusively on technical analysis when making investment decisions.</p>



<h3 class="wp-block-heading" id="h_01JD8TQTW7HK07C48S5W65QGT4"><strong>About&nbsp;</strong><strong>XT.COM</strong></h3>



<p>Founded in 2018,&nbsp;<a href="http://www.xt.com/en">XT.COM</a>&nbsp;now serves nearly 8 million registered users, over 1,000,000+ monthly active users and 40+ million users in the ecosystem. Our comprehensive trading platform supports 800+ high-quality tokens and 1000+ trading pairs. XT.COM&nbsp;<a href="https://www.xt.com/en">crypto exchange</a>&nbsp;supports a rich variety of trading, such as&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt">spot trading</a>,&nbsp;<a href="https://www.xt.com/en/trade/btc_usdt?type=margin">margin trading</a>, and&nbsp;<a href="https://www.xt.com/en/futures">futures trading</a>&nbsp;together with an aggregated&nbsp;<a href="https://www.xt.com/en/nft">NFT marketplace</a>. Our platform strives to cater to our large user base by providing a secure, trusted and intuitive trading experience.</p>


What is Cryptocurrency Technical Analysis and How to Do Technical Analysis for Bitcoin Price

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