Linear vs inverse crypto contracts
A linear crypto contract is margined and settled in a stablecoin or fiat-like currency, and its profit is proportional to the price change. An inverse contract is margined and settled in the coin itself, has a fixed dollar value per contract, and its profit in coin depends on the difference of the inverse prices, which makes it nonlinear in dollar terms.
Senzoukria · Glossary · Updated September 2026
At a glance
- Linear P&L (Binance USDⓈ-M)
- Size × direction × (mark − entry), in USDT
- Inverse P&L (Binance COIN-M)
- Contracts × multiplier × direction × (1/entry − 1/mark), in coin
- BTC COIN-M multiplier
- 100 USD per contract
- Senzoukria crypto feeds
- Linear markets: Binance USD-M, Bybit linear
Linear contracts
On a USDT-margined contract, size is quoted in the base asset and profit is paid in USDT. Binance gives the unrealized P&L of USDⓈ-M futures as size × direction × (mark price − entry price). A long of 0.1 BTC from 60,000 to 61,000 earns 0.1 × 1,000 = 100 USDT. Each dollar of price change is worth the same whatever the price level, and the collateral's value does not move with BTC.
Inverse contracts
On a coin-margined contract, each contract is worth a fixed number of dollars, 100 USD for Binance's BTC COIN-M contracts, and profit is paid in BTC. Binance gives the P&L as contract size × multiplier × position × direction × (1 ÷ entry − 1 ÷ mark). Its worked example: 100 contracts, 10,000 USD, bought at 50,000 correspond to 0.2 BTC; closed at 55,000 they correspond to about 0.1818 BTC, so the profit is about 0.0182 BTC.
Because both the P&L and the collateral are in BTC, a long inverse position gains BTC as the price rises while each BTC is also worth more dollars, and loses on both counts as the price falls. A short inverse position of the same dollar value as the BTC collateral offsets the collateral's dollar exposure, which is why inverse shorts are used to hold a stable dollar value while keeping collateral in coin.
Why the distinction matters for data
- Volume in contracts on an inverse market is a dollar amount; volume on a linear market is a coin amount. Comparing them requires conversion to notional value.
- Order flow on a linear and an inverse contract of the same coin comes from partly different participants and should not be summed without care.
- Size filters defined in contracts do not transfer between the two families.
In Senzoukria
The desktop's crypto derivatives sources are linear markets: Binance USD-M perpetuals, through the fapi endpoints, and Bybit linear perpetuals. Binance COIN-M inverse contracts are not connected. Quantities keep each venue's convention, and the documentation warns that notional comparisons across venues need care; crypto charts are analysis only, with no order routing.
Related
In the same section
- Liquidation cascade
- Limit order
- Liquidation price
- Level 2 data
- Liquidity
- Level 1 data
- Liquidity heatmap
- LEAPS
Sources
This page in other languages
Frequently asked questions
- Which is simpler for a beginner, linear or inverse?
- Linear contracts are easier to reason about in dollars: profit is proportional to the price change and the collateral is stable. Inverse contracts add the effect of the collateral's own price moving, which changes the account's dollar value even without a position.
- Why do inverse contracts have a fixed dollar size?
- Because they were designed for traders holding the coin as collateral: each contract represents a fixed dollar exposure, and profits and losses are settled in coin. The coin quantity per contract therefore changes with price.