How to maintain asset value in bearish zone with perpetual futures?

The financial market in 2023 is replete with a variety of innovative ways of making money. A quick registration at a crypto or stock exchange gives access to thousands of different financial instruments, allowing people to trade digital or financial assets of different categories. Concentrating on crypto, which is highly volatile, often leads to heavy losses due to market fluctuations and uncertainty. There have not been any relevant solutions to resolve this issue. However, a high-performance crypto exchange, BYDFi, offers synthetic hedging to maintain the crypto’s USD value held by its traders in the highly volatile crypto market.

BYDFi inverse perpetual futures

BYDFi has introduced a new feature called BYDFi Inverse Perpetual Futures after witnessing the current issues in the crypto market where thousands of traders were struggling to earn profits. The Inverse Perpetual Futures feature came in as a savior introduced by Singapore‘s highly advanced cryptocurrency exchange, BYDFi.

Perpetual Futures is a special kind of contract where traders can hold their transactions for a period of time that is suitable for them. The basis for endless futures trading is the price index that contains the average value of digital assets based on the main spot markets and the relative trading volumes. To understand how the Inverse Perpetual Futures works for new traders in the extreme crypto market environment, it is important to understand the concept of synthetic hedging.

BYDFi’s synthetic hedging refers to using a particular financial feature to hold a leverage sell short position of 1x on the platform to achieve the objective of hedging. With BYDFi’s Inverse Perpetual Futures, the traders need to place one 1x power deal temporary position with their cryptocurrency assets to maintain the overall value of USD in the bearish market.

For example, A crypto trader purchases BTC using BYDFi Gateway at approximately €50,000 for the currency pair BTC/EUR. Let’s assume the trader held on to 1 BTC and kept the currency in his BYDFi account without indulging in opening or closing trade positions. The value of 1 BTC will remain unchanged if the trader withdraws it from BYDFi to a different spot exchange to convert it to a Fiat currency.

Now there can be two scenarios –

If the value of the currency pair BTC/EUR depreciates to €30,000, in which case, the trader’s BTC value will also change to $30,000 if he plans to withdraw his funds from BYDFi. This means the trader will face a loss of €30,000 owing to the crypto market movements that caused the currency price depreciation. While the perpetual futures bearish market is bad for cryptocurrency investors, the depreciation of the currency pair is the worst.

If the value of the currency pair BTC/EUR appreciates to €100,000, in which case, the trader’s BTC value will also be €100,000 if he plans to withdraw his funds from BYDFi. This also means the trader will gain a total of €50,000 due to the upward movement of the crypto market, which caused the appreciation of the BTC/EUR currency pair.

With BYDF Inverse Perpetual, let us see how bearish market movements affect a trader’s virtual assets.

Suppose BTC/EUR depreciates to €30,000 and the trader wants to close a 1x leverage sell short position. In that case, the total balance will be – initial 1 BTC + 1 BTC profit from closing temporary sell position = 2 BTC. In this way, even in a bearish market, the trader using BYDFi Inverse Perpetual Futures can get 2 BTC with the total account balance – 2 BTC*€30,000 = €60,000.

If BTC/EUR appreciates to €100,000 and the trader chooses to close the position, the total account balance within BYDFi will be – initial 1 BTC – 0.5 BTC loss incurred from closing short sell position = 0.5 BTC. As a result, the total value in the BYDFi account will be 0.5 BTC*€100,000 = €50,000.

Hence, by opening leverage of 1x using a 1 BTC account balance, traders can get the actual value without being affected by the volatile crypto market conditions and thrive even in the bearish market.

Why is BYDFi different?

BYDFI provides a maximum leverage of 150x and 200x on perpetual futures, depending on the currency pairs being traded on the platform. For trading pairs BTC/USDT, ETH/USDT, and PAXG/USDT, the maximum leverage is 200x. For trading pairs XRP/USDT, DOGE/USDT, and 1000SHIB/USDT, the maximum leverage is 150x. These leverage values set BYDFi exchange apart from others that offer maximum leverage for perpetual futures, typically around 100x and 125x.

In addition, the BYDFi cryptocurrency exchange offers the fastest engine in the market that processes up to 1,000,000 transactions per second. Moreover, the platform is available for both Web and Mobile (iOS and Android) and has the cheapest transaction fees. The platform is regulated and reliable, offering easy deposit and withdrawal options, service diversification, and the best tools that crypto traders can use.