What is the difference between USDT-M and COIN-M Futures?

USDT-M futures use stablecoin for margin and PnL, simplifying risk management, while COIN-M futures use the crypto asset itself, adding volatility but enabling hedging for coin holders.

Jul 25, 2025 at 09:42 am

Understanding USDT-M Futures Contracts

USDT-M Futures refer to futures contracts denominated and settled in USDT (Tether), a stablecoin pegged to the US dollar. These contracts allow traders to speculate on the price movements of cryptocurrencies like BTC, ETH, or SOL without owning the underlying asset. The key feature here is that both the margin and the profit or loss (PnL) are calculated in USDT, making it easier for traders familiar with stablecoin-based trading to manage risk. For example, if you open a long position on BTC/USDT-M, your entry margin, maintenance margin, and realized PnL will all be reflected in USDT balances within your futures wallet.

How COIN-M Futures Work

COIN-M Futures, on the other hand, are inverse futures contracts where the margin currency and PnL are denominated in the cryptocurrency itself — such as BTC, ETH, or BNB. This means if you trade a BTC/USD COIN-M contract, your margin must be posted in BTC, and any gains or losses will also be paid out in BTC. This structure introduces inherent volatility because the value of your position is tied to the base coin’s fluctuating price. Traders must monitor not only the price of the futures contract but also how the underlying coin’s value impacts their equity.

Key Differences in Margin Handling

• USDT-M Futures use stablecoin (USDT) for all margin calculations, which simplifies risk assessment since USDT remains pegged to $1.
• COIN-M Futures require the base cryptocurrency as collateral, so if the coin’s price drops significantly, even without adverse movement in the futures contract, your equity could erode due to the declining value of the margin asset.
• In cross-margin mode for USDT-M, losses from one position can be offset by gains in another, all within the same USDT balance. In COIN-M, this effect still applies, but the fluctuating value of the coin adds complexity to portfolio-wide risk exposure.
  

  Practical Steps to Open a USDT-M Futures Position

• Navigate to the futures trading interface on platforms like Binance or Bybit.
• Select the USDT-M tab (often labeled “USDT-margined”).
• Choose a pair like BTC/USDT.
• Set your leverage using the slider — for example, 10x.
• Enter the quantity in USDT (e.g., 100 USDT worth of BTC).
• Click “Buy” or “Sell” depending on your market view.
• Confirm the order. Your position will appear in the “Positions” tab with all values (entry price, liquidation price, PnL) displayed in USDT.
  

  Practical Steps to Open a COIN-M Futures Position

• Go to the same futures section but switch to the COIN-M tab (sometimes called “Coin-margined”).
• Select a pair like BTCUSD (note the absence of “/” — it’s often written as BTCUSD).
• Ensure your wallet holds the required base coin (e.g., BTC).
• Set leverage — say, 25x.
• Input the contract quantity (e.g., 1 BTC contract).
• Execute the trade. The system will deduct BTC from your wallet as margin.
• Monitor the position: your liquidation price and unrealized PnL will be in BTC, not USD or USDT.
  

  When to Use USDT-M vs COIN-M

  
  Use USDT-M Futures when you want stablecoin-denominated risk control, especially if you’re new to futures or prefer predictable margin behavior. They are ideal for strategies focused on altcoin pairs like SOL/USDT or DOGE/USDT where volatility is high but you want to avoid compounding risk from coin-denominated margins.
  Choose COIN-M Futures when you already hold large amounts of a base coin (like BTC) and wish to hedge or speculate without converting to stablecoins. Professional traders often use COIN-M for hedging spot holdings — for example, going short on BTCUSD COIN-M while holding BTC in spot to lock in USD value.
  

  Frequently Asked Questions

  Can I switch between USDT-M and COIN-M positions in the same account?
  
  Yes, most exchanges allow both types of futures under one account. However, funds are segregated: USDT used in USDT-M cannot be used for COIN-M unless manually transferred or converted.

  Why does COIN-M have inverse PnL calculation?
  
  Because the contract is quoted in USD but settled in the base coin (e.g., BTC), profits in USD must be converted back into BTC at the current spot rate. This creates non-linear PnL behavior — a $100 gain doesn’t always equal the same BTC amount depending on BTC’s price at settlement.

  Is liquidation risk higher in COIN-M?
  
  Yes, indirectly. Even if the futures price doesn’t move against you, a drop in the base coin’s value (e.g., BTC price falls 20%) can reduce your margin ratio and trigger liquidation. This is not a factor in USDT-M, where the margin asset is stable.

  Do funding rates differ between USDT-M and COIN-M?
  
  Yes. Funding rates are determined by market demand and are calculated independently for each contract type. A BTC/USDT-M contract may have a different funding rate than a BTCUSD COIN-M contract, even if both track the same underlying price. Always check the funding rate indicator before holding positions overnight.