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How to calculate Bithumb contract rate

Bithumb calculates its futures contract rate by adding the funding rate to the underlying cryptocurrency's index price, which is a weighted average of spot prices from multiple exchanges.

Nov 19, 2024 at 10:02 pm

How to Calculate Bithumb Contract Rate

Bithumb is one of the largest cryptocurrency exchanges in the world, and it offers a variety of futures contracts for trading. The contract rate is the price at which a futures contract can be bought or sold, and it is based on the underlying index price.

How to Calculate the Underlying Index Price

The underlying index price for a Bithumb futures contract is calculated by taking the weighted average of the spot prices for the underlying cryptocurrency on a number of different exchanges. The weights are based on the volume of trading on each exchange.

How to Calculate the Funding Rate

The funding rate is a fee that is paid or received by traders who hold futures contracts. The funding rate is designed to incentivize traders to hold contracts in line with the underlying index price.

The funding rate is calculated as the difference between the interest rate on the underlying cryptocurrency and the interest rate on the futures contract. The interest rate on the underlying cryptocurrency is determined by the demand for the cryptocurrency, while the interest rate on the futures contract is determined by the supply of contracts.

How to Calculate the Contract Rate

The contract rate is the price at which a futures contract can be bought or sold. The contract rate is calculated by adding the funding rate to the underlying index price.

Example

The following is an example of how to calculate the contract rate for a Bithumb BTC futures contract:

The underlying index price is calculated by taking the weighted average of the spot prices for BTC on a number of different exchanges. The weights are based on the volume of trading on each exchange.
The funding rate is calculated as the difference between the interest rate on BTC and the interest rate on the futures contract. The interest rate on BTC is determined by the demand for BTC, while the interest rate on the futures contract is determined by the supply of contracts.
The contract rate is calculated by adding the funding rate to the underlying index price.

Conclusion

The contract rate for a Bithumb futures contract is based on the underlying index price and the funding rate. The underlying index price is calculated by taking the weighted average of the spot prices for the underlying cryptocurrency on a number of different exchanges. The weights are based on the volume of trading on each exchange. The funding rate is calculated as the difference between the interest rate on the underlying cryptocurrency and the interest rate on the futures contract. The interest rate on the underlying cryptocurrency is determined by the demand for the cryptocurrency, while the interest rate on the futures contract is determined by the supply of contracts.

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