Apr 18
Perpetual Futures Trading in crypto
Perpetual contracts are widely offered by crypto-derivative exchanges, and it is designed similar to a traditional futures contract.
How do Bitcoin Futures work?
Imagine there are two traders, Alice & Bob with a different mindsets. Alice thinks The price of Bitcoin may raise in the upcoming days. So he planning to Buy Bitcoin futures. Bob feels the price of Bitcoin will fall down in the future due to some reason, so he plans to sell Bitcoin futures.
So Alice's bet is that the Bitcoin price will be higher than the ‘Settlement price’ when the contract expires. Meanwhile, Bob’s bet is that the Bitcoin price will be lower than the settlement price. In this contract, neither party holds any Bitcoin yet.
Here is the leverage of dealing with Future trading, Alice wants to bet on a rising price of 5 Bitcoins now let's assume here Alice does not need to put in the future market which makes it different from than Bitcoin market itself he doesn't have to pay the full contract price so he is not going to hand over $100,000 which is 5 times 20 to put on the central exchange as a deposit, similar for Bob too.
So, Alice could have bought 5 Bitcoin for $ 20,000 each or $ 100,000 in total. if the price then rose to $ 25,000 per coin, his profit is $ 25,000(5*5000), which is just a return of 25%. Leverage raises this 5 times.
Why Perpetual Future trading is important
In Perpetual Future trading traders can hold the position for as long as they want, The contract involved in it doesn't follow any expiry date. a perpetual futures contract, also known as a perpetual swap.
The perpetual contracts offered by cryptocurrency derivative exchanges are typically priced by versions of the above formula, where the difference in cryptocurrency prices from one day to the other can be thought of as a dividend due to the owners of the asset.
CrossTower introduces perpetual futures trading
CrossTower Inc., one of the world’s fastest and leading crypto and digital asset exchanges, is pleased to announce the launch of perpetual futures trading, now available on CrossTower’s Bermuda digital exchange.
Kapil Rathi, Co-founder & CEO of CrossTower, said: “Perpetual futures provides investors critical tools that can facilitate and shape their investment objectives. The advantages of perpetual futures trading are truly compelling for portfolio construction, and we are thrilled to be contributing to the maturation of the digital asset ecosystem. CrossTower is developing cutting-edge trading products and we are excited to be at the forefront of innovation.”
How to access CrossTower Perpetual Future Trading?
This can be accessed via the CrossTower Global Pro platform, futures trading is available to qualified clients. It will benefit institutions — including asset and wealth managers, family offices, hedge funds, professional traders on both the buy and sell-side — and sophisticated retail customers.
You can register for the CrossTower Trading account, Here.
References:-
- https://www.businesstoday.in/crypto/story/crypto-exchange-crosstower-introduces-perpetual-futures-trading-329936-2022-04-15
- Cryptocurrency Future, Source
- For more crypto learning, access CrossTower Education Resources
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