Some time ago we wrote an article in which we presented in detail the Multi-Assets mode on Binnace Futures. Today we continue this thread only from a different angle. By reading this guide you will find out why it is worth using this mode. But before we start we will explain what stablecoin BUSD is, why you should choose it as a hedge and much more, so here we go!
What are stablecoins?
Stablecoin is one type of cryptocurrency designed to maintain a constant value over time. Its value is generally pegged to a specific real-world currency, often the US dollar (but always). In such an arrangement, one unit of cryptocurrency usually equals one unit of real currency. Unlike highly volatile cryptocurrencies such as Bitcoin, the stablecoin price should not fluctuate.
However, recent events in the stablecoin market – namely the sharp drop in the TerraUSD price– have put this type of asset under the regulators’ magnifying glass. As a result, Treasury Secretary Janet Yellen has cited the risks to broader financial stability associated with stablecoins. In its turn, the Federal Reserve issued a report discussing the uncertainty about underpins stablecoins and the lack of oversight in this market.
However, there are still quite a few stablecoins backed by real dollars, one of which is BUSD, a dollar token from Binance.
What is BUSD?
BUSD is a regulated stablecoin pegged in value to the US dollar at a ratio of 1:1. Moreover, its holders can convert their tokens to fiat anytime. It is a stablecoin whose purpose is to hold a constant value.
BUSD allows traders to exit the market without actually leaving the blockchain and thus avoid the tax liability that arises when converting cryptocurrency to fiduciary money.
The value of BUSD evolves directly with the value of the US dollar. Binance provides an audit of its reserves once a month. Because it is a regulated token, it is much safer than others, such as USDT – whose reserves are an enigmatic mystery.
Why choose BUSD as a hedge?
With BUSD-margined contracts, you can use various strategies in your trading. Moreover, you can count on multiple bonuses and discounts.
- Rebates and discounts: Using Binance Futures with BUSD as a hedge, you can get a good number of maker/taker rebates and discounts.
- Versatility: BUSD is a reputable stablecoin that allows traders and investors to trade multiple contracts (BNB, ETH, BTC etc.). You can open any futures contract and settle it with stablecoin. This way, you don’t have to buy actual cryptocurrencies to open a position. What’s more, you will pay fewer fees. It’s because no conversions will take place during settlement in BUSD. Moreover, the Multi-Assets Mode allows users to diversify between multiple stablecoins and increase capital efficiency. With this feature, users can split their margin between USDT and BUSD. This feature is handy when opening positions in these two markets.
- Ease of estimating returns: 1 BUSD is always equivalent to one dollar. Therefore, you can evaluate all costs and profits when trading BUSD-margined contracts.
Why is it worth holding BUSD?
Trading on Binance Futures using BUSD-margined contracts is not the only advantage of using this stablecoin. BUSD is also simply worth owning for several other reasons. Here they are:
Regulation and support: BUSD is a stablecoin backed by cash equivalents. Other than that, it is a regulated token. Each BUSD is directly pegged to USD, and Binance holds more money in reserves than BUSD in circulation.
No commissions: It is more affordable to make transactions with BUSD on the Binance exchange. This platform is currently offering a special promotion called Zero Maker-Fee. Moreover, for four trading pairs with BUSD, you will not pay a penny of the transaction fee. This way, you can reduce your trading costs to an absolute minimum.
How to start trading BUSD-margin futures?
Trading BUSD-M futures is very simple. To get started, you need an account on Binance Futures. Then, you only need to follow a few simple steps to sell or buy BUSD-M futures on the Binance platform. Here they are:
- Open an account: First, you must create an account on Binance and pass verification. You can do this by clicking on this link. Remember to enable 2FA verification for your safety.
- Deposit funds: If you already have an account on Binance, deposit funds into your Futures wallet. This platform supports a wide variety of digital assets.
- Select a contract: Select the BUSD-M futures contract that corresponds to you. For example, you should select BUSD Perpetual under the “USD-M Futures” option.
- Select Leverage: Select the appropriate leverage for your contract. By default, x 20 leverage is used, but you can increase it up to x 125 on some coins.
- Place an order: Now, you have to place your order. Binance supports many different types of orders. However, beginners are encouraged to use a market or limit order.
How to use Multi-Assets mode to trade BUSD-M contracts?
Trading BUSD-M contracts in Multi-Asset mode can give you quite a few advantages. First of all, you can increase your profits. Secondly, you can minimize your trading costs.
Multi-Asset mode also allows you to trade USDT-M contracts easily. Importantly, you will not have to convert them to USDT. Instead, it simply means you can change each underlying cryptocurrency in two ways.
For example, if you think BUSD/BTC will face a loss due to a future drop in the value of BTC, you can enter a USDT/BTC short contract to offset the potential loss.
For a detailed guide on using Multi-Assets mode, visit our other comprehensive guide.
Use Mock Trading to improve your skills
Mock Trading on Binance Futures enables you to improve your trading skills. It’s because the functionality works on the principle of a demo account. As a result, the market is available in real-time, and you do not risk losing your funds. Here we explain step by step how to access the demo trading feature:
Step 1: Log in to your account. If you don’t already have one, create one at this link. Next, navigate to Binance Futures by hovering your mouse over “Derivatives” at the top and then BUSD-M Futures. Alternatively, you can click directly on this link.
Step 2: Click on your Profile and “Mock Trading”.
Step 3: Click continue and take the Binance Futures quiz. The trial account will be funded with a starting balance of $3,000.
Step 4: Click “Back to Live” to test yourself in the real market.
Step 5: You can also access the Trial Trade through the Binance app. Enter the Futures option and then Mock Trading.
If you want to know more about trading BUSD-Margined futures contacts on Binance, check out official Binance website for more info!