Coin-margined (inverse) futures
Also called: inverse futures · coin-margined contracts · COIN-M
Definition
Coin-margined (inverse) futures are futures contracts where margin and profit or loss are in the underlying coin, such as BTC, instead of a stablecoin.
This entry is shown in English.
How Coin-margined futures works
In a coin-margined BTC contract you deposit BTC as margin, and gains and losses are paid in BTC. Contracts are often quoted in USD value, for example 100 USD per contract, which is why they are called inverse: your profit in BTC follows the formula position value × (1 ÷ entry price − 1 ÷ exit price).
This structure suits holders who already have the coin and want to measure results in it. Miners and long-term holders use coin-margined shorts to hedge, because the BTC they post as margin rises in value as the short loses, and falls as the short gains.
The catch is double exposure on longs. If you go long with BTC as margin, both your position and your collateral lose value when the price falls, so liquidation can come faster than you expect. Profit and loss are also not linear in USD terms. Contract sizes and available coins differ by exchange.
Example
Suppose you open a 10,000 USD long on a BTC inverse contract at 50,000 USD. If BTC rises to 60,000, your profit is 10,000 × (1 ÷ 50,000 − 1 ÷ 60,000) ≈ 0.0333 BTC, worth about 2,000 USD at the new price. If BTC instead falls to 40,000, your loss is 10,000 × (1 ÷ 40,000 − 1 ÷ 50,000) = 0.05 BTC, and the BTC you posted as margin has also lost 20% of its USD value.
Common mistakes
- Opening a leveraged long with coin margin without realising the collateral falls along with the position.
- Expecting profit and loss to be linear in USD as it is with USDT contracts.
- Confusing contract count with coin amount when sizing the position.
Learn and practise
FAQ
Why are coin-margined futures called inverse?
Because profit and loss in the coin are calculated from the inverse of the price. That makes payoffs non-linear when measured in the coin.
Who should use coin-margined futures?
They suit people who hold the coin and think in coin terms, such as miners hedging output. Many beginners find USDT-margined contracts easier to understand.