When trading futures, most traders focus only on entry price and leverage. But there’s one factor that’s even more critical for account survival during a crash: the collateral type.
In derivatives trading, capital flow is mainly divided into two categories: USDT-Margined (using stablecoins as collateral) and Coin-Margined (using the coin itself as collateral). If you don’t fully understand the difference, you expose yourself to double risk.
🔸 USDT-Margined (the modern standard)
You use USDT to long or short
B
TC.
No matter how much Bitcoin moves, 1 USDT is always equal to 1 dollar in your margin wallet.
When price drops, you only take a loss on your position’s PnL.
The risk is linear, clear, and easy to calculate.
🔸 Coin-Margined (the graveyard in a downtrend)
Here, you use BTC to long BTC.
If BTC crashes:
• Your long position goes into loss.
• The value of your BTC collateral also drops.
Your liquidation price hits much faster than expected because your margin is losing value at the same time.
When Coin-M open interest is high, crashes become extremely brutal. Liquidations force exchanges to sell the collateral into the market 👉 creating more sell pressure 👉 pushing price lower 👉 triggering even more liquidations.
🔹 When should you use Coin-M?
Only if you’re a long-term holder using shorts for hedging. When price drops, you gain BTC from the short, which helps offset the fall in BTC value and preserves your USD value.
🔹 When should you use USDT-M?
For all short-term speculation. Keep your collateral in stablecoins for better risk control and psychological stability.
Don’t get greedy by using Coin-M to go long in an uptrend hoping for “compound profits.” When the market turns, those compound gains quickly become compound losses—and your account gets wiped.
Be honest: have you ever blown a Coin-M account because you didn’t account for your collateral losing value?
News is for reference only, not financial advice. Always read carefully before making any decision.