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Inverse Futures Contracts

Inverse futures contracts flip the script on traditional futures trading by allowing sellers to profit when the price of an asset drops. Unlike standard futures, where gains come from price increases, inverse futures reward traders for betting on price declines.

In these contracts, the value is pegged to a fiat currency like the US dollar or a stablecoin such as Tether (USDT), regardless of the crypto asset being traded. This creates an inverse relationship between profit and the price movement of the underlying cryptocurrency. Even though the market price of, say, BTC/USD is in USD, profit and margin are calculated in Bitcoin (BTC). Inverse futures are often used by traders looking to hedge their portfolios during market downturns.

Inverse futures contracts offer a unique way to capitalize on falling prices, making them an essential tool for advanced traders navigating volatile markets.