What Are Cryptocurrency Futures?

Crypto futures trading involves speculating on the future price of cryptocurrency such as Bitcoin. Traders can take both long and short positions, meaning they can bet on either a rise or a fall in the price of crypto assets. Unlike spot trades where you are buying or selling crypto directly, with futures trading you are betting on the future price movements of crypto assets without actually owning them.

Crypto futures contracts allow traders to control large amounts of capital with little money upfront because they only need to put down a small fraction of the total value of their position as margin. This makes it easier for traders to get into bigger positions without having to commit more capital. It also means that traders can benefit from larger returns than what would be possible through spot trades alone.

What are Bitcoin Futures?

Bitcoin futures are derivative products that allow traders to speculate on the future price movements of bitcoin (BTC). These contracts represent agreements between buyers and sellers to buy or sell BTC at a predetermined price in the future. Bitcoin futures are traded on exchanges like XT.COM, which allow traders to make leveraged bets on BTC’s future price movements without having to own any BTC themselves.

What are differences between Bitcoin futures trading and Bitcoin spot trading?

The main difference between spot trading and futures trading is that with spot trading you are buying and selling actual digital assets (i.e., coins or tokens) while with crypto futures trading you are speculating on their future prices without actually owning any assets. This means that with futures you don’t have to worry about storing your coins in a wallet or transferring them around when you want to close out your position – something which is not always easy with spot trades due to slow transfer times and high fees associated with some exchanges. With spot trading you have exposure to the volatility of the underlying asset while with futures you do not; instead you have exposure only to the market price movements of the asset itself. Additionally, with spot trading you need to be familiar with order books while with futures contracts all trades occur through central exchanges where prices are standardized. This makes it easier for traders who are new to cryptocurrencies as they don’t need to be as familiar with order books and other aspects of crypto markets before getting involved in futures markets. 

Types of Bitcoin Futures

Bitcoin Dec Futures Contract

A popular type of Bitcoin future is the “Bitcoin Dec Future” (often referred to as just “Dec Future”). This type of future has an expiration date that’s set to the last day of December every year. On this day, traders can choose to either take delivery of the physical bitcoins or close out their positions before settlement occurs. The settlement price is determined by the average price from multiple exchanges over the course of the month leading up to the expiration date.

Bitcoin Dec Inverse Futures Contract

Another type of future is the “Bitcoin Dec Inverse Future,” which works just like a regular Dec Future with one important difference – the settlement price is determined by subtracting each exchange’s average daily closing prices from 100 on each day in December prior to expiration. This means that if an exchange averaged $10,000 per day in closing prices during December, its inverse would be 90 (100 – 10). The inverse future uses this method instead of averaging all exchanges together because it helps smooth out volatility and reduce risk for traders who don’t want to be exposed to sudden changes in price.

Bitcoin Perpetual Contract

A bitcoin perpetual futures differs from traditional future contracts because there is no expiration date; rather, it is continuously renewed until one party decides to close out their position by selling or buying back their coins. This type of contract offers more flexibility than regular futures contracts since it doesn’t expire after a set period; however, this also means that traders can be exposed to unlimited losses if they leave their positions open too long and don’t manage them properly. Traders should use caution when entering into perpetual contracts as they can quickly turn into very risky investments if not monitored closely.

Bitcoin Inverse Perpetual Contract

The same principles apply for inverse perpetual contracts as for regular ones – the only difference being that these contracts settle with actual Bitcoins instead of cash. Inverse perpetuals provide more liquidity than regular perpetuals since there is no expiry date; however, they also carry more risk since there is no upper limit on potential losses due to market volatility. Like regular perpetuals, traders should use caution when entering into inverse perpetuals as these types of investments can quickly become very risky if not managed carefully and monitored regularly.

Bitcoin ETFs

Bitcoin Exchange Traded Funds (ETFs) have recently become popular among investors looking for easier ways to access cryptocurrency markets without having to go through complicated exchange processes or manage their own wallets. ETFs work similarly as stocks by allowing investors to buy into funds backed by underlying assets such as cryptocurrencies like BTC or ETH etc., without having direct ownership over those assets themselves. This makes investing in crypto much simpler since all you have to do is buy shares in an ETF fund rather than trying your hand at trading cryptocurrencies themselves which can often be too complex even for experienced traders. Furthermore, ETFs also provide investors with greater liquidity compared with buying directly from exchanges since there are many buyers and sellers participating in these funds all over the world 24/7/365 days a year making it easier for investors capitalize on market volatility when it arises.

Advantages of Bitcoin Futures Trading

The main advantage that comes with bitcoin futures trading is that it allows traders to diversify their portfolio by investing in multiple assets simultaneously. Additionally, since the prices of these assets fluctuate over time, traders can potentially benefit from making strategic trades based on market trends and news releases. Furthermore, unlike other forms of investing such as stocks or ETFs, there is no need to buy or sell any actual Bitcoins in order to trade them – all that is needed is the right platform or broker to conduct trades through. This makes it much easier for any trader – regardless of experience level – to get involved with cryptocurrency trading without having to worry about buying/selling actual currencies themselves.

Another advantage of bitcoin futures trading is that leverage is allowed in certain situations. This means that traders can potentially increase their returns by taking on a greater amount of risk than they would normally be able to with other types of investments. Additionally, because bitcoin futures have standardized contracts, settlement times are much faster than with other investments such as stocks or options. This makes them ideal for day traders who need to execute trades quickly in order to take advantage of market movements. Since all contracts are settled in cash (rather than physical currency), traders do not have to worry about storing any actual bitcoins which can be difficult given the volatility associated with cryptocurrencies.

Finally, Bitcoin futures are liquid. While some may be hesitant about getting into cryptocurrency due to its volatile nature, many platforms offer highly liquid markets for Bitcoin futures contracts so that users can quickly enter and exit positions as needed without having their profits tied up for too long. This helps reduce risk while still allowing traders ample opportunities for profits when prices move in their favor.

Disadvantage of Bitcoin Futures Trading

However, there are some drawbacks associated with bitcoin futures trading. Firstly, since these contracts are leveraged products, trading them requires careful risk management strategies as one wrong move could result in large losses for investors due to its high degree of volatility. Furthermore, since these instruments are traded on exchanges rather than directly between two parties (as with spot markets), fees charged by exchanges could also eat into profits earned from successful trades. Finally, even though these instruments provide access to the crypto market for smaller investors who might not have enough funds to buy actual coins/tokens outrightly; more experienced traders may find that other forms of crypto investments such as options offer more flexibility when it comes to managing risk exposure and taking advantage of market opportunities.

How To Trade Bitcoin Futures

If you decide that trading Bitcoin futures is something that interests you, it’s important to familiarize yourself with the basics before getting started. Start by researching different brokers or exchanges where you can trade Bitcoin futures contracts; this will help ensure that you are getting the best price available for each trade. Once you have chosen a broker or exchange, learn how their platform works and practice making mock trades until you feel comfortable enough to start investing real money. Finally, it’s essential to remember risk management techniques such as setting stop losses and taking profits at pre-determined levels in order to protect your capital from significant losses due to market volatility.

How to Trade Bitcoin Futures on XT.COM?

Step 1

Sign up XT.COM Account

Welcome to XT Futures! To get started, please create an XT.COM account and enable 2FA verification to fund your account.

Step 2

Deposit Fund

Deposit your funds in USDT or any of the cryptocurrencies supported by XT Futures. With our wide range of supported assets, you’re sure to find the perfect fit for your needs.

Step 3

Choose Bitcoin Futures Contract

Whether you’re new to Bitcoin futures trading or a seasoned pro, choosing the right contract is essential to your success. On XT, there are two types of Bitcoin futures contracts available: USDT-M Futures and COIN-M Futures. While both have their own advantages, it’s important to select the one that best fits your trading style and needs.

Step 4

Select Leverage

Choose your level of leverage for trading Bitcoin futures. The default is 20x, but you can adjust this according to your needs. More information can be found on our support pages.

Step 5

Place Order

Here you can trade Bitcoin futures contracts using a variety of order types. To begin, you can select a buy-limit or buy-market order for your first contract. With our platform, you can take advantage of the volatile market and make profits from your predictions.

About XT.COM

Founded in 2018, XT.COM now serves nearly 8 million registered users, over 1,000,000+ monthly active users and 40+ million users in the ecosystem. Our comprehensive trading platform supports 800+ high-quality tokens and 1000+ trading pairs. XT.COM crypto exchange supports a rich variety of trading, such as spot trading, margin trading, and futures trading together with an aggregated NFT marketplace. Our platform strives to cater to our large user base by providing a secure, trusted and intuitive trading experience.