Leading centralized cryptocurrency exchange Bybit has opened perpetual contracts for four new crypto assets: ETH, LTC, XTZ and LINK. The development will expand the range of options available to professional derivatives traders on its platform.
More Perps on Bybit
The Singapore-based Bybit recently announced the addition of four more currencies to its perpetual contracts platform. Among the newly-traded assets are three major native blockchain tokens (ETH, LTC, and XTZ) and Chainlink’s utility token LINK. USDT will serve as the reference currency for the perpetual futures contracts.
The opening of the new futures markets will also be accompanied by several promotional features, such as trading fee discounts and lotteries. In addition, Bybit will continue its generous referral program that enables users to receive a 10%, 15%, or 20% trading fee discount if they succeed in onboarding one, three, or five friends.
How Perpetual Contracts Work
Futures contracts are derivatives that oblige the buyer to purchase or sell a certain amount of the underlying asset at a fixed price before the set deadline, or closing date. Traders who agree to buy the asset by definition believe that its price will be higher than the contract price, while traders who pledge to sell have the opposite expectation. Even though physical delivery may be part of a futures contract, such as for oil, it normally entails net cash settlement, depending on whose expectation turned out to be correct.
A type of futures contracts popular in the cryptocurrency space, called perpetual contracts, differs from the traditional model in that it doesn’t have a closing date. Traders can keep their positions open as long as they like provided that certain conditions continue to be met. The key advantage of this approach is that it opens to traders the possibility of leveraged exposure to the underlying asset. The buyer of a leveraged perpetual contract can open their position by merely depositing an amount of the underlying asset many times smaller than what the contract involves. In this way, if the trader anticipates the market correctly, they can multiply their gains without risking a lot of their own money.
Bybit Going Strong While Competitors Flounder
Bybit’s move comes at a time when some of its direct competitors in the cryptocurrency derivative trading sector are facing difficulties. The Seychelles-based BitMEX has been hit with a joint enforcement action by the US Department of Justice (DOJ) and Commodity Futures Trading Commission. Several of its founders and executives have been charged with financial crimes, in particular the failure to implement the required anti-money-laundering and KYC procedures.
In the wake of the news, the exchange saw massive withdrawals of BTC by concerned traders. Meanwhile, OKEx, which also boasts significant derivatives trading activity, suspended cryptocurrency withdrawals on October 16, citing the Chinese government’s investigation against a key holder. It later changed its version of the events, blaming the matter on the arrest of one of its founders unrelated to the exchange’s business.