Detailed analysis of Bull and Bear tokens from FTX

Your Crypto Boss
9 min readAug 11, 2020


FTX- is an exchange of crypto currency derivatives. It was founded by Sam Bankman-Fried and Gary Wang in February 2019. FTX is registered in Antigua and Barbuda. The platform offers traders the opportunity to trade on the spot market and the derivatives market. The total daily trading volume is $700 million, the number of trading pairs is 457. The official website of the exchange is localized in English, Chinese, Russian, Turkish, Spanish, French, Italian, Portuguese and other languages.

FTX cooperates with Alameda Research, one of the largest liquidity providers in the crypto market. This solves the problem of liquidity shortages that any new exchange faces. It’s noteworthy that Bankman-Fried and Wang were involved in the creation of Alameda Research, so the cooperation between the two companies started from the moment of the exchange’s existence.

“FTX is an exchange created by traders for traders” — this is how the development team describes the project. Given the exchange’s annual experience and the presence of serious competitors in the crypto derivatives market, FTX has managed to win a share in the segment, and some consider it “breakthrough and innovative”.

Bull and Bear tokens

One of the financial tools that FTX provides is the Bull and Bear tokens deployed on the Ethereum network, the ERC20 standard. This makes it possible to display them on any wallet that supports the standard. The tokens are traded with 3x leverage based on perpetual futures on the following crypto currencies: BTC, ETH, EOS, ETC, BCH, BSV, BNB, LTC, ALT, XTZ, XRP, LINK, TRX, ALGO, SHIT, XAUT, EXCH, USDT, TRYB, MATIC, ADA, HT, ATOM, OKB, MID, TOMO, DOGE, PAXG, BTMX, DRGN, PRIV, LEO.

For example, you are confident that the BTC rate will go up, you buy a BULL token, placing in it the amount you think is necessary. This amount is used for automatic purchase of perpetual Bitcoin futures. If the forecast is confirmed, the profit will be 3x from the market price movement, but if the forecast is wrong, the loss will be 3x. Formally, these tokens are created for margin trading, but there are some nuances that need to be analyzed.

Price indices of tokens

Bull and Bear tokens appeared on August 5, 2019. Token, the main asset of which was Bitcoin, was worth $72,000.

By November 2019, the token had fallen considerably in price and started trading with Bitcoin at approximately the same level, with a difference of no more than 10%.

As we can see from the chart above, it was correlated for a short time and already in early 2020 token BULL in several times overtook bitcoin by cost. This was influenced by positive news related to FTX.

December 20, 2019 Binance invested in FTX and opened long positions in FTT (FTX internal token), most of which have been frozen for two years. On 13 January 2020 Bull and Bear tokens were listed on Binance, which had a positive impact on their price.

On March 12, 2020, when all markets went down, the BULL token fell much lower than the Bitcoin. The fault for this is the perpetual futures, which are the basis of these tokens. When the Bitcoin fell to the level of $4800, all those who owned settlement futures to sell the BTC tried in a hurry to get rid of them. It collapsed BULL token and at the beginning of May 2020 it’s traded at $2 800-$3 400.

The price of Bitcoin has doubled over the past two months, while retail investors are holding long futures positions. This trend may increase the demand for Bull and Bear tokens, at least in relation to Bitcoin.

The cost of Bull and Bear tokens was also affected by delisting from Binance, which was held on March 31, 2020. Audiences of these exchanges differ significantly, so after delisting demand for these tokens has decreased markedly.

The situation with Ether is similar to Bitcoin. When listing the ETHBULL token, it cost $10,000, but then went down and now trades at $227, but the price remains higher than the underlying asset.

Only in difference from tokens BULL, ETHBULL began to correlate with ETH at the beginning of April 2020, until then the price between the token and the main asset was tens of times different.

But after the fall on the 12th of March, ETHBULL either correlates with ETH or slightly overtakes it in price, as can be seen on the chart above.

The situation relative to other tokens, which are presented on the FTX directly depends on the demand for the crypt currency, which underlies the token. The charts below show the value of the underlying asset and the Bull token.

EOSBULL tokens are almost three times more expensive than EOS, after the fall of March 12 showing only an upward trend.

ETCBULL tokens are 38 times more expensive than ETC, although on March 12 their price was $112.

Pricing of Bull and Bear tokens depends on perpetual futures, which are presented on FTX. The more perpetual futures on Ether, the more expensive ETHBULL token will be. From the charts above it follows that tokens BULL and ETHBULL are now in decline, but after March 12, both tokens began to recover their positions.

How do the tokens differ from margin trading?

If you trade within a day, there are no differences, except for one thing — you buy a token and it can be placed on a wallet that supports ERC20 standard, and there are many of them. In the case of margin trading, you simply take funds on credit, trade and can withdraw only profits or those funds that you have invested. If you consider trading for more than one day, there is a difference in profit and loss. Let’s see how much you can earn in spot trading, in futures trading with leverage 3 and tokens with leverage.

The asset — BTC.

The price — $8,000.

Growth — within two days, 5% in each.

Final price — $8,800.

  1. Spot trading. Profit will be 8 800–8 000/8 000 = 0.1–10% — $800.
  2. Futures trading with 3x leverage. Profit will be 3x(8 800–8000/ 8000) = 0.3 = 30% — $2 400.
  3. Leveraged token trading. Here the profit is considered to be different. Bitcoin growth was 5% on the first day and 5% on the second day. But in contrast to margin trading, token itself reinvests profit into the underlying asset, thus maintaining leverage of 3 and increasing your lot. Profit on the first day will be 3x (8 400–8 000/8 000) = 0.15–15% — $1 200. There is a reinvestment and profit for the second day will be 3x (8820–8 400/8 400) = 0.15–15% — $1 260. The total profit for two days — $2 460.

But take your time before buying these tokens, there are two significant nuances:

  • This scheme works only when the days of growth prevail, over the days of the underlying asset falling. If on the first day the Bitcoin rose by 5% and on the second day it fell by 5%, then losses from the second day will be calculated from the price that has been fixed after the first profitable day. It looks like this: the first day $8,000 + 5% = $8,400, the second day $8,400–5% = $7,980.
  • There is a chance that positions will be liquidated, as on any other exchanges that provide trading with leverage. If the price of the underlying asset becomes by 33% or more cheaper, the token will be liquidated.

One of the advantages of token over margin trading is full automation. Buy a Bull or Bear token and choose a long or short position — these are all actions that need to be performed, all the rest of the token will do itself.

How does rebalancing work?

Every day at 00:02 UTC rebalancing takes place. Let’s examine in detail in which cases a token can be balanced.

  1. Reinvestment of profits. By purchasing a BULL token you invested, for example, $16,000 at a BTC price of $8,000. Leverage of 3 is applied and token is traded with balance of $48 000. After a day, the BTC price has increased to $8400, i.e. by 5%. The balance has increased to $50,400. In this case the leverage will be 50 400/16 000 = 3.15x. To return the leverage to 3 tokens reinvests made profit ($2 400) by buying BTC on them. Next trading session will be based on $8,400 per BTC.
  2. Loss payback. The scheme is the same as the reinvestments. Buy BULL token for $16,000, at BTC price $8,000. Leverage 3 is applied and token is traded with a balance of $48,000. The next day the BTC price drops to $7,600, which is 5%. The balance drops to $46,600. In this case the leverage will be 45 600/16 000 = 2.85x. Since the losses are deducted from your funds, not from borrowed funds, the token will put up for sale futures for the right amount, thus returning the leverage to 3x.
  3. Anti-liquidation. Liquidation of positions is possible, but in order to avoid this, the token contains the following process: if the price of the underlying asset has decreased by more than 10% per day, a rebalancing takes place to avoid liquidation of the position. But if the price of the asset has fallen by more than 33%, liquidation is inevitable.

The following conclusion can be drawn from the principle of rebalancing: the upcoming halving of bitcoin is a good time for Bull and Bear tokens. Back in early May, according to the CFTC report, the indicator of open interest in bitcoin futures increased, returning to last summer’s levels. Prices for Bull and Bear tokens depend on perpetual futures, the more futures there are, the higher the token price will go. It’s likely that in the near future the BULL price will be higher than the BTC.

Binance Incident

In early April, CryptoWolfs Signal accused the crypto exchange Binance of malfunctioning the BULL and BEAR token market during the collapse of March 12–13. According to the service, the exchange provided inaccurate information on how these tokens work and are used correctly. As a result, according to the representatives of the service, 150 traders lost more than $1 million in the liquidation of positions. For example, the token EOSBULL collapsed 46 times, while the base asset EOS fell only by 2.4 times. No matter what, the leverage of 3 couldn’t give such a fantastic difference between the underlying asset and the token. Probably, this incident did take place, but among tens of thousands of Binance 150 users the affected traders look more like a misunderstanding of the device and token operation principles. At the same time, the number of traders and their profits or saved capital during the market crash are much larger.


FTX token BULL and BEAR is a very useful tool in the crypto market that allows you to earn more and hedge better, but with one important condition: it requires a clear understanding of its mechanisms. A complex rebalancing procedure can give both exponential profit and loss during a strong market movement. This is a significant difference from margin trading and any other derivative represented on crypto exchanges.

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