COIN-M (COIN-Margined) futures are crypto futures derivatives that let you trade using Bitcoin, Ethereum, or other cryptocurrencies as collateral and settlement. Unlike USDT-M futures, which rely on stablecoins like Tether, COIN-M contracts keep everything in crypto, giving traders direct exposure to price movements without converting to fiat-pegged assets.
This structure appeals to those who want full crypto exposure while engaging in leveraged positions through crypto margin trading. If you’ve used platforms like Binance, Bybit, or BTCC, this guide will walk you through how COIN-M futures work, when to use them, and how they compare to other popular futures products.
What Are COIN-M Futures?
COIN-M futures are crypto-margined futures contracts that allow traders to use Bitcoin, Ethereum, or any other cryptocurrency as both margin and settlement, earning profits and paying losses in the chosen cryptocurrency, bypassing the need for stablecoins like USDT.
The “COIN-M” acronym (Coin-Margined) signals that every contract component, from collateral and profit to loss and fees, is tied to the base cryptocurrency. For example, a BTC/USD COIN-M futures contract on Binance Futures requires Bitcoin as margin, tracks BTC’s USD price, and settles gains or losses in BTC.
This contrasts with USDT-M futures, where trades are collateralized and settled only in Tether (USDT), insulating traders from crypto’s volatility but capping upside potential.
This guide will walk you through how COIN-M futures work, and if you’re still comparing exchanges, check out our best crypto futures trading platforms guide for 2025.
How COIN-M Futures Work
COIN-M futures let you collateralize and settle trades using the base crypto asset, meaning your profits and losses are realized in crypto, not stablecoins. In COIN-M futures, profits are earned directly in the base cryptocurrency (e.g., BTC), amplifying your crypto holdings when prices rise without converting gains to stablecoins.
Losses are deducted from your collateralized crypto asset (e.g., BTC), meaning declining prices reduce your crypto balance and can trigger margin calls and liquidations if margins fall below required levels.
To understand their mechanics better, let’s dissect their structure, pricing, and risk dynamics.
COIN-M Contracts
COIN-M contracts are engineered for traders who want to:
- Hedge against USD devaluation or regulatory risks tied to centralized stablecoins by avoiding stablecoin exposure.
- Amplify crypto holdings by compounding and appreciating crypto as collateral.
- Align portfolio strategy by trading derivatives without converting crypto to stablecoins, maintaining pure crypto contract trading exposure.
Platforms like BYDFi, BTCC, and Phemex offer COIN-M futures with leverage of up to 125x, 200x, and even 500x, but their mechanics vary. For instance, BYDFi’s BTC/USD COIN-M perpetual contract uses BTC for margin and settlement, while its ETH/USD equivalent allows ETH as collateral, and so on.
Key Features of COIN-M Futures
- Crypto-Native Margining: Collateral is held in the same asset you’re trading (e.g., BTC for BTC/USD contracts).
- Settlement in Kind: Profits and losses adjust your crypto balance directly. If BTC rises 10%, your margin grows in BTC terms.
- Volatility Leverage: Margin value fluctuates with the crypto’s price, creating a feedback loop during market swings while using leverage in futures trading.
- No Conversion Risk Within the Contract: Since everything is denominated in crypto, you avoid stablecoin or fiat conversions, which is ideal for traders who want to stay fully exposed to crypto.
- Higher Liquidation Sensitivity: Your margin and position can both shrink when prices fall, increasing the chance of liquidation unless managed carefully.
COIN-M vs USDT-M Futures: What’s the Difference?
Below is a table showing the main differences between COIN-M vs USDT-M futures.
| Factor | COIN-M Futures | USDT-M Futures |
|---|---|---|
| Collateral | Cryptocurrency (BTC, ETH) | Stablecoin (USDT) |
| Profit/Loss Currency | Crypto (same as margin) | USDT |
| Risk Profile | Dual exposure: Position + margin value fluctuates | Isolated position risk; margin value stable |
| Liquidation Speed | Faster during crypto volatility | Slower due to stable collateral |
| Ideal Market | Bull runs (appreciating collateral) | Bear/neutral markets (stable margin) |
→ COIN-M is optimized for directional bets in trending markets.
→ USDT-M is better for scalping or risk management.
Price Quotation & Settlement Mechanics
COIN-M contracts track the USD price of the underlying crypto but settle on the crypto itself. For example:
- Contract: BTC/USD COIN-M Perpetual
- Price Source: BTC’s USD index (e.g., average of Binance, Coinbase, and Kraken prices)
- Settlement: Every 1% move in BTC’s USD price translates to a 1% gain/loss in BTC terms.
Example:
- BTC price: $30,000 → You go long 1 BTC with 10x leverage.
- BTC rose 20% to $36,000 → Profit = 0.2 BTC (20% of 1 BTC position).
- Settlement: Your account is credited with 0.2 BTC, increasing your total BTC holdings.
This creates a compounding effect involving your margin’s USD value, which grows as the price of BTC appreciates, enabling larger positions without requiring additional collateral. Conversely, a price drop erodes margin value faster than in USDT-M contracts.
Dynamic Margining System
COIN-M margin requirements shift with the crypto’s price. Let’s break it down:
- Initial Margin (IM): The collateral required to open a position. For 10x leverage, IM = 10% of the position’s notional value (in BTC).
- Maintenance Margin (MM): The minimum equity to keep the position open. If your margin balance falls below MM, you face liquidation.
Example:
- Position: 1 BTC/USD COIN-M contract at $30,000 with 10x leverage.
- IM: 0.1 BTC (10% of $30,000 ÷ $30,000/BTC).
- MM (Binance): 0.5% of position value = 0.005 BTC.
- If BTC drops 15% to $25,500:
- Loss = 0.15 BTC (15% of 1 BTC).
- Remaining margin: 0.1 BTC – 0.15 BTC = -0.05 BTC → Liquidation.
Auto-Deleveraging (ADL) & Liquidation Nuances
COIN-M contracts face unique liquidation risks:
Liquidation Price Formula
Liquidation Price=Entry Price1+(Leverage×MMPosition Size)Liquidation Price=1+(Leverage×Position SizeMM) Entry Price
For a 10x BTC position:
COIN-M positions are less prone to auto-deleveraging than USDT-M, as losses are absorbed in crypto rather than stablecoins. However, cascading liquidations can occur faster during flash crashes.
Why Traders Use COIN-M Contracts During Bull Runs
In a BTC bull market, using BTC as collateral creates a positive feedback loop:
- Rising BTC price → Margin value (in USD) increases → Traders can open larger positions without injecting more capital.
- Example: A trader starts with 1 BTC ($30,000) as margin. If BTC doubles to $60,000, their margin’s USD value becomes $60,000, allowing 2x larger positions at the same leverage.
Portfolio Synergy for Long-Term Holders
BTC maximalists can hedge or amplify exposure without converting to fiat or stablecoins. For example:
- Hedging: Short BTC/USD COIN-M futures while holding spot BTC to lock in prices.
- Compounding: Reinforce long positions with profits earned in BTC.
Are COIN-M Futures Riskier Than USDT-M?
Yes, but risk is a spectrum, not a binary. Here’s why:
Dual Volatility Exposure
- COIN-M: A 20% BTC price drop slashes both your position’s value and your collateral’s USD worth.
- USDT-M: Only the position is affected; your USDT margin remains stable.
Liquidation Velocity
COIN-M liquidations accelerate during flash crashes. For example, a 15% BTC plunge could wipe out a 10x leveraged position, whereas USDT-M traders might survive with margin top-ups.
Traders often panic-sell collateral during COIN-M drawdowns, exacerbating market downtrends. USDT-M’s stable collateral reduces emotional trading. Effective mitigation strategies include:
- Using lower leverage (5x instead of 20x).
- Setting stop-loss orders in USD terms.
- Monitoring funding rates to avoid negative carry.
Dodging the consequences of a margin call is essential to prevent forced liquidation of positions at unfavorable prices, which can lock in losses and erode trading capital.
Liquidation Mechanics
Learn more about how the liquidation price works here: What is Liquidation Price?
Liquidation Price Formula
- LP=Entry Price×(1−MM+IM)1+(Leverage×MM)LP=1+(Leverage×MM)Entry Price×(1−MM+IM)
- MM = Maintenance Margin (0.5% on Binance COIN-M).
- IM = Initial Margin (10% for 10x leverage).
Partial Liquidations: Some exchanges (e.g., Bybit) close only part of your position to restore margin balance.
Post-Liquidation: Remaining margin (if any) is returned in crypto, minus fees.
To get a better idea of your liquidation price, use our liquidation price calculator to get a quick estimate. This can save you many times from irrational and high-risk trades.
What Cryptocurrencies Can You Use as Margin?
For BTC/USD COIN-M futures:
- Binance explicitly requires BTC as margin for BTC/USD COIN-M contracts. ETH cannot be used as collateral for this specific pair.
- ETH is only allowed as margin for ETH/USD COIN-M contracts (e.g., ETHUSD_0925).
Why this matters:
- Contract-Specific Rules: COIN-M margin requirements are pair-dependent. BTC pairs demand BTC margin; ETH pairs require ETH.
- Cross-Margin Exceptions: Some platforms (e.g., Bybit) let you use cross-margin mode with other assets, but Binance’s BTC/USD COIN-M enforces BTC-only collateral.
Can You Change a COIN-M Position to USDT-M Mid-Trade?
No. COIN-M and USDT-M contracts are siloed. To switch margin types, you must:
- Close the COIN-M position (realizing PNL in crypto).
- Convert crypto to USDT (triggering a taxable event).
- Open a new USDT-M position.
This makes COIN-M ideal for traders committed to crypto-native strategies.
Advanced COIN-M Futures Trading Strategies
COIN-M futures trading can be lucrative for crypto holders who want to hedge without selling assets. For example:
- Hedging: Short selling with leverage to protect against downside risk without selling spot crypto.
- Compounding: Reinvest BTC-denominated profits to pyramid positions.
- Tax Efficiency: Avoid taxable events by holding gains in crypto (varies by jurisdiction).
COIN-M Futures Tax Implications: A Global Perspective
Tax rules for COIN-M futures trading vary widely:
- U.S. Traders: Profits on offshore crypto futures (like most COIN-M) are generally treated as capital gains/losses, not ordinary income, and are taxable upon closing the trade, regardless of whether the profit is held in crypto. The 60/40 rule applies to regulated futures on exchanges like CME.
- EU/Germany: Holding crypto for 1+ years exempts gains from taxes. COIN-M profits held in BTC for >1 year may qualify. Future profits are taxable as speculative income, even if settled in crypto, and the 1-year holding period for tax exemption applies to spot crypto, not derivatives profits.
Funding Rates in COIN-M: Hidden Costs and Opportunities
- Perpetual COIN-M contracts charge/pay funding every 8 hours to tether prices to spot. Rates are paid in crypto.
- Favorable funding rates (longs pay shorts) in COIN-M can offset gains. Example: BTC pumps 10%, but you pay 0.05% funding hourly → 1.2% daily drag.
- Go long COIN-M and short spot during high negative funding (rare but profitable).
- Use a crypto futures calculator to model breakeven prices.
How Market Cycles Shape COIN-M Futures Trading
COIN-M futures thrive or collapse based on market cycles, and understanding this rhythm separates survivors from casualties. In bull markets, COIN-M’s crypto-collateralized structure becomes a superpower: rising asset prices inflate your margin’s USD value, letting you pyramid positions (reinvest profits into larger trades) without injecting fresh capital.
For example, a 50% BTC rally could boost your collateral’s buying power by 50%, enabling aggressive compounding. Conversely, bear markets turn COIN-M into a trap. Depreciating collateral erodes your margin buffer, forcing traders to inject more crypto (risking overexposure) or face cascading liquidations. During the 2022 crypto winter, BTC’s 65% crash obliterated over-leveraged COIN-M positions, as margin values and position prices fell.
Sideways markets demand nuance. Traders might short COIN-M futures to hedge spot holdings or exploit funding rate arbitrage (earning fees in BTC while waiting for volatility). The key is aligning your strategy to the cycle:
- Bull: Use COIN-M to amplify gains via margin recycling.
- Bear: Avoid COIN-M or short with extreme caution.
- Neutral: Exploit funding rate differentials or volatility spikes.
FAQs
Perpetual COIN-M contracts (e.g., BTCUSD_PERP) never expire but have funding fees. Quarterly contracts (e.g., BTCUSD_0925) settle on set dates.
Yes. On BYDFi, ETH can collateralize ETH/USD and BTC/USD COIN-M contracts.
Fees are deducted from the margin crypto. A 0.05% taker fee is paid in BTC for a BTC-margined trade.
Yes. Perpetual contracts use funding rates (every 8 hours) to anchor prices to the spot market. Rates are paid/received in crypto.
Yes, but it risks your entire crypto balance. An isolated margin is safer for volatile trades.
BTCC offers up to 500x for BTC/USD COIN-M. BYDFi caps at 200x.
The breakeven price includes fees and funding costs. For a 10x long, use entry price × (1 + (total fees + funding costs) / leverage).
Exchanges auto-liquidate if prices hit stops. Compensation is rare unless there are proven system errors.
Conclusion
COIN-M futures offer a powerful way to stay fully invested in crypto while trading with leverage, ideal for bullish markets and portfolio hedging without relying on stablecoins. Platforms like BYDFi and BTCC offer COIN-M futures that let traders maximize gains in bull markets, hedge crypto holdings, and avoid stablecoin exposure.
However, with greater potential rewards come higher risks, making disciplined margin management essential. To trade smarter, test your strategy in a demo environment and use tools like stop-loss and take-profit calculators to fine-tune your approach before committing to real capital.
