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What Are Bitcoin Futures And How Do They Work

What are Bitcoin futures?

  • Available on most crypto exchanges.
  • They allow you to maximize profits (and losses) from trading.
  • You can trade crypto without actually owning it.

Types of Bitcoin futures

  1. Expiration date

What should you know about futures trading?

  • The price of the underlying asset. It’s the value of the spot asset on which the price of the contract depends. For example, the price of BTC futures directly depends on the value of BTC. The exchanges usually calculate the price of the underlying asset based on data from one or more spot exchanges.
  • Futures price. It’s the price of the contract when opening a position.
  • Basis. It’s the difference between the futures price and the underlying asset. The basis can be positive (when the spot price is higher than the futures price) or negative (when the spot price is lower than the futures price). For example, there’s a future contract to buy BTC at $16,000, and then BTC rises to $18,000. In this case, we have a positive basis of $2,000.

Benefits of Bitcoin futures trading

  • Trading with leverage. Some exchanges provide leverage up to x100 and even higher, which allows you to maximize the efficiency of using the deposit and enhance the results of the transaction.
  • No need to buy a physical asset. Settled contracts can be traded without owning physical assets. That is, futures are available not only on crypto exchanges (but, for example, on CME) and can be traded even in those jurisdictions where cryptocurrency is prohibited.
  • Hedging. A trader can hedge against volatility by opening a futures position opposite the main position in the spot market.
  • High liquidity. Since futures are derivatives, their number and trading volumes are many times higher than spot ones. It is easier to sell or buy futures than a real asset, and price slippage in transactions is lower compared to spot.


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