Bybit Guide

Top Reasons to Use Bybit USDC Futures to Maximize Returns

Intermediate
Bybit Guide
10 черв 2024 р.

USDC Futures stand out as a crucial tool for sophisticated investors seeking to optimize their trading strategies and manage risks effectively. These Futures contracts, offered with exceptional liquidity on platforms like Bybit, are designed not just for simple trading but for implementing complex strategies such as cash-and-carry trade, which involves exploiting market inefficiencies through arbitrage. In this article, we’ll explore Bybit USDC Futures and learn how you can use them to maximize your returns.

Key Takeaways:

  • USDC Futures are a type of Futures contract in which settlement takes place in USDC (a stablecoin tied to the U.S. dollar), providing a reliable and stable means to manage Futures positions.

  • Some of the benefits of using Bybit USDC Futures include risk minimization, cost efficiency and enhanced leverage via the Unified Trading Account.

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What Are USDC Futures?

USDC Futures are a type of Futures contract in which settlement takes place in USDC (a stablecoin tied to the U.S. dollar), providing a reliable and stable means to manage Futures positions. These instruments are tailored for large-scale investors looking to hedge arbitrage and capitalize on market discrepancies.

What Is a Cash-and-Carry Trade?

A cash-and-carry trade is a type of arbitrage strategy that exploits the price differences between the Futures and Spot markets. In this approach, a trader buys an asset in the Spot market, while simultaneously selling a Futures contract for the same asset. This method is considered "market neutral" because it’s designed to create profit, regardless of whether the market price of the asset rises or falls. Profit in one position typically offsets loss in the other, making the trader’s position indifferent to fluctuations in the underlying asset's price direction. This strategy allows traders to capitalize on inconsistencies between two pricing mechanisms without speculating on the asset’s overall market movement.

How Do USDC Futures Work?

USDC Futures contracts are designed for trading on a specific expiration date, enabling traders to set buy or sell prices in advance. These contracts are both quoted and settled in USDC, and must be managed through a Unified Trading Account.

USDC Futures contracts offer financial flexibility, with no funding fees or charges for delivery settlement. The delivery price of these contracts is determined by the average index price during the final 30 minutes before the contract's delivery time. Importantly, the index price used for USDC Futures contracts aligns with that of the corresponding Perpetual contract, ensuring consistency across trading platforms.

Currently, Bybit only supports BTC and ETH USDC Futures contracts. These USDC Futures will be available for trading from 8AM UTC to 9AM UTC on the day of listing.

Type

BTC Futures

ETH Futures

Symbol*

BTC-24MAR23

ETH-31MAR23

Underlying Asset

BTC

ETH

Quoted in

USDC

USDC

Settled in

USDC

USDC

Tick Size

$0.50

$0.05

Minimum Order Size

0.001 BTC

0.01 ETH

Supported Leverage

Up to 50x

Up to 50x

Settlement Interval

Every 8 Hours — 12AM (Midnight), 8AM and 4PM UTC

Every 8 Hours — 12AM (Midnight), 8AM and 4PM UTC

Delivery Time

8AM (UTC) on Delivery Date

8AM (UTC) on Delivery Date

Delivery Price

Average of Index Prices 30 mins Before Delivery

Average of Index Prices 30 mins Before Delivery

Delivery Fee

0

0

Trading Hours

24 Hours, 7 Days a Week

24 Hours, 7 Days a Week

Contract Variations

Weekly, Bi-Weekly, Tri-Weekly, Monthly, Bi-Monthly, Quarterly, Bi-Quarterly

Weekly, Bi-Weekly, Tri-Weekly, Monthly, Bi-Monthly, Quarterly, Bi-Quarterly

Eligible Account

Unified Trading Account

Unified Trading Account

Eligible API Version

Open API V5

Open API V5

*On Bybit, the symbol of the USDC Futures C=contract is composed of the underlying asset delivery date. For example, BTC-17MAR23 means that the BTC-USDC Futures contract was settled on Mar 17, 2023 at 8AM UTC. 

Listing Rules

Upon the delivery of the weekly contract, the bi-weekly contracts will automatically become the new weekly contracts, and the tri-weekly contracts will transition to bi-weekly. Subsequently, a new tri-weekly contract will be introduced. 

If the delivery date of a monthly contract coincides with that of an upcoming tri-weekly contract, the monthly contract will convert into the new tri-weekly contract. Simultaneously, the bi-monthly contract will advance to become the new monthly contract, and a new bi-monthly contract will be issued.

Benefits of Using Bybit USDC Futures

There are multiple benefits of using Bybit USDC Futures, as listed below.

Risk Minimization

USDC Futures allow traders to hedge by using both Spot and Futures positions. Regardless of market movements, this combination can lock in profits due to the divergent exposure on both ends. Essentially, whether the market trends upward or downward, the opposing positions in Spot and Futures markets provide a buffer, thus reducing overall risk.

Enhanced Leverage Via the Unified Trading Account

Another significant advantage is the utilization of the Bybit Unified Trading Account. This setup enables traders to borrow funds, thereby increasing leverage and potentially amplifying returns. The integration of leverage in a single account simplifies management, and enhances the ability to respond to market changes swiftly.

Cost Efficiency

USDC Futures typically don’t require continuous trading, unlike other derivative products. Traders can maintain their positions until the delivery date without incurring costs associated with trading fees, making USDC Futures a cost-effective option. This feature is particularly beneficial for long-term hedging strategies.

Top-Tier Liquidity

Enjoy exceptional liquidity when you trade USDC Futures on Bybit. Our platform supports the rapid execution of large-scale trades without significant price slippage. This is crucial for strategies that require quick entry and exit, thus enhancing overall trade profitability.

No Delivery Fees

There are no delivery fees for USDC Futures held to the delivery date. This cost-effective feature ensures that profits are maximized by reducing the expenses associated with long-term trading positions.

USDC Futures in Portfolio Margin 

If you’d like to further maximize capital efficiency, use USDC Futures in Portfolio Margin. This approach allows for increased leveraging opportunities and streamlined capital management, boosting the potential for higher returns.

Arbitrage Strategies to Use With USDC Futures

Spot and Futures Arbitrage

The Spot and Futures arbitrage strategy entails buying an asset in the Spot market while selling the same asset in the Futures market at a higher price, thereby capitalizing on the price discrepancies. The success of this approach depends heavily upon transaction costs, market liquidity and volatility, as these factors influence your net return from the arbitrage.

You can trade both USDC Futures and Spot on Bybit with top-tier liquidity.

Funding Rate Arbitrage

Funding rate arbitrage is a trading strategy that involves earning through periodic payments exchanged between long and short positions in Perpetual contracts. When the funding rate is positive, a trader can buy an asset at Spot prices, and simultaneously short a Perpetual contract. This strategy, known as positive arbitrage, leverages the funding fees as a steady income stream.

The Bybit Unified Trading Account allows you to use over 70 assets as collateral for trading, which enhances the effectiveness of your capital and offers an ideal platform for cash-and-carry trading via Cross Margin and Portfolio Margin. For example, if you’d held BTC Spot without borrowing, and shorted the same amount in BTC Perpetuals for the past 30 days, you would have earned a risk-free return of 3.12% for just one month — and if the market continued its upward trend, the annual percentage rate (APR) would be an impressive 37.44%. 

Below are some popular coins with high APRs for funding rate arbitrage over the past 30 days.

Token

Funding Rate Arbitrage APR (With Auto-Saving Mode)

LINK

49.2%

SOL

46.8%

FIL

55.2%

ORDI

51.6%

WLD

50.4%

The Success of Using the Cash-and-Carry Trade

Cash-and-carry trade involves buying an asset in the Spot market while simultaneously selling a Futures contract. Traders lock in the differential between the Spot and Futures prices, which is particularly effective in stable or upward-trending markets. Implementing lower leverage levels can help to mitigate the risk of liquidation. Since Perpetual contract prices closely follow Spot price movements, there’s generally less (or even no) risk involved in funding rate arbitrage. However, traders should remain cautious of the potential risks of liquidation resulting from significant mispricing between Spot and Perpetual contracts.

When implementing the cash-and-carry trade strategy, ensure that you invest properly in order to reduce trading risks. Look for markets with high liquidity to ensure smooth trade execution. Please note that slippage may occur if large investments are pushed into a small-cap token with limited market depth.

Low transaction costs are essential to maximizing profits. Don’t change investment assets or adjust positions frequently, as this will prevent the profits earned and interest from margin trading (if any) from covering transaction costs, including trading fees and slippage.

Bybit Arbitrage

Bybit offers a cash-and-carry trading tool to make arbitrage simple. The Bybit Arbitrage trading tool (available only on the Bybit App) is designed specifically to assist in capturing arbitrage opportunities. It enables the placement of multi-leg orders in opposite directions, which streamlines the process and makes it more efficient. Traders can explore rankings based on funding rates or spreads in order to find some profitable APY pairs for arbitrage opportunities. 

Should You Use USDC Futures?

If you're intrigued by the benefits of hedging risks, leveraging capital efficiently and exploring arbitrage opportunities, USDC Futures could enhance your trading strategy. Whether you're experienced or just beginning, Bybit's platform offers the tools and liquidity to help you maximize returns. Nevertheless, it's important to do your own research and consider the risks involved in Futures trading. Make sure to fully understand both the instruments and the market conditions before you start trading.

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Closing Thoughts

USDC Futures provide a robust tool for traders looking to efficiently execute hedging arbitrage strategies. By leveraging Futures alongside Spot and Perpetual contracts, traders can enjoy reduced risk, manage their portfolios more efficiently through unified accounts and minimize transaction costs. As the crypto market continues to evolve, these strategies will be instrumental in helping traders navigate the complexities of cryptocurrency investments, ensuring profitability in various market conditions. Sign up today and start leveraging the advantages of USDC Futures with Bybit, and remember to proceed with caution and informed decision-making.

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