As we explained in the previous sections in this guide, an account is only able to send new orders as long as its Total Account Margin is higher than the Initial Margin required for all open positions and open orders. As soon as the Total Account Margin drops below the Initial Margin, the account can no longer send any new orders unless such order would reduce the existing position (e.g. a sell order, when the current position is long). To continue adding positions (e.g. add buy orders, when the current position is long), the trader will have to transfer additional funds that can be used for margin to their wallet, close open orders, or close open positions.
As we mentioned previously, perpetuals have a mechanism to ensure pricing aligns with the underlying spot product. We refer to the spread between the Spot and the Perpetual contract as Basis. The resulting exchange of payment between long and short holders of the contract is called the Basis Payment.
The massive rally in cryptocurrencies is almost unrecognizable from three years ago. When the Bitcoin (BTC) price marked its all-time high just shy of $20K in December 2017, it was exclusively retail-driven. Regulation was scant and insufficient; hacks, scams, and Ponzi schemes abounded; investors made (and lost) a lot of money overnight; and major financial institutions like JPMorgan were steadfast in calling BTC a "fraud" and a "bubble."
On EQONEX, we differentiate between the Market Price and the Mark Price of the perpetual. The Market Price is the last traded price of the product on EQONEX. The Market Price may deviate (significantly) from the rest of the market for example in case of large orders or an illiquid order book. The Mark Price gives a fairer value for the contract by taking a 3-second TWAP of the Market Price. A TWAP is the average of the open, high, low and close price for a specific period. In the case of the Mark Price these periods are three 1-second intervals. As the Mark Price is used for P&L calculation and to determine whether the position needs to be liquidated, using a TWAP to smooth out temporary spikes in prices should prevent unnecessary liquidations.
Perpetual futures are futures contracts with no maturity, as opposed to dated futures, which expire at a pre-set date and time such as every month or every quarter. Any position in a perpetual future stays open until the trader decides to close the trade by executing an offsetting trade, or until the trade gets liquidated by EQONEX.
One of the most important trends in the cryptocurrency industry over recent months has been a notable rise in corporate treasurers buying Bitcoin (BTC) as a balance sheet asset. Against the backdrop of a failing global economy and a weakening global reserve currency (the USD), both publicly listed and private companies are beginning to diversify from traditional low-risk assets such as bank deposits, treasury bills, and commercial paper to find a more effective balance between risk and yield.
Since Bitcoin's momentous rise this holiday season, alt coins have been making noise. What is driving this alt season, and what coins have been leading the way?
We believe the emergence of cryptocurrency derivatives is the inevitable evolution of the digital asset class and should contribute to reductions in volatility and enhancing market efficiency.
Many virtual currency exchanges advertise the ability to trade products with leverage. In traditional finance, there are a number of popular leveraged products, such as ETFs. An ETF is a product that moves as a function of the underlying factor and the leverage factor. For example, an ETF that has 5x leverage will lose or gain 5% if the underlying asset moves by 1%. Leverage defines your position’s exposure to the underlying asset class.
EQONEX today announces the launch of its EQONEX BTC Perpetual Futures (BTC/USDC (F)), the first in a suite of innovative derivative products that will later include options and dated futures. EQONEX is poised to be at the forefront of exponential growth expected in the crypto derivatives markets in the coming years.
What are derivatives? Derivatives have been around for millennia; their use can be traced back to ancient times when people bartered with one another to trade perishable goods such as grain and livestock. They gained widespread popularity during the rise of the financial services sector, when newer valuation techniques were created in the 1970s and rapidly developed the derivatives market. It is difficult to imagine modern finance without derivatives now.