So, BTC3L isn't real bitcoin. It's designed to triple your returns if bitcoin goes up. And BTC5L? Same deal, but it's supposed to increase your gains by five times if bitcoin rises.
Then there's the BTCStablecoin 5x long perpetual. It has a funding rate that can be added or taken away. On the other hand, the BTCStablecoin 5x future doesn’t have a funding rate, but it does expire. I’ve seen some exchanges offer this for up to 6 months now.
Which one do you guys like more? What are the risks you see with them?
Have any of you tried the 3L and 5L in the spot market? Can you get liquidated on those just like with perpetuals and futures?
not sure I understood your question properly tho but I prefer 10x-20x using it daily trading on perpmate and hyperliquid, anytime I use higher leverage I also reduce size to maintain liquidation.
I prefer perpetual contracts. Leveraged tokens are bad news
There is a reason they are not popular and also why some exchange even end up delisting them after sometime. Yes there is no outright liquidation, but that rebalancing mechanism is messed up and isn't as straight forward as perpetual contracts.
They may not have "funding rate" but they do have those weird fees. Subscription fee, redemption fee, daily management fees on top of trading fees. I would rather go with funding fees that are sometimes negative or positive, and you get paid depending on your position
You used 10 to 20x leverage and you said that you reduced the size to maintain liquidation. What does that mean? Or you mean to reduce liquidation by using lower amount of money to trade. I think that is what you mean.
BTC3L, BTC5L, BTC3S and BTC5S are leverage tokens that you can directly buy on the spot market. You will just buy the tokens and the tokens will move 3 and 5 times in the direction of bitcoin for the L, while it will move in the opposite direction 3 and 5 times for S.
It basically depends on a traders choice really, your time, tolerance and resources.
They all aim to multiply price action and have their own different risks.
However, if the price of BTC drops in a day, a 3L token would be expected to hit zero, but most exchanges these days have the ability to rebalance your margin position to prevent hitting zero, but the token doesn't recover even if the price of BTC rises.
I have always preferred 3L/5L tokens because of convenience and ease. They just sit there without you bothering about managing your margins.
Dated futures are also more superior for a 3-6month large bet, while for a 1-4 week swing, perpetuals provide the best funding rate.
Just my opinion though, but I beg to differ on this subject matter.
You can visit this link to read and understand better: https://medium.com/coinmonks/leveraged-token-3f5257808b22
But you also said that there could be a drop in a day that can 3L to hit zero, and that is not yet 5L that is almost 1.67 times more volatile.
For a long term trade, it is not good to go for 3L or 5L because it has a big disadvantage of making you not to profit up to an extent you should.
I also do not like that they are not having bitcoin price in multiple of 3 and 5 but they have different price entirely.