Bitcoin Futures


Bitcoin Futures are a financial derivative product that allow traders to speculate on the future value of Bitcoin using leverage and their own money. Traders can go long or short Bitcoin Futures, depending on which direction they think Bitcoin will move in, but they can never lose more than what they put up for collateral against the trade amount.

More About Bitcoin Futures

Continue reading to learn more about:

Cryptocurrency
How are bitcoin futures settled?
How does bitcoin futures work?
Can you make money with bitcoin futures?
Additional Information about Bitcoin Futures


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Cryptocurrency


In simple words, cryptocurrency is a digital cash. It's a form of decentralized tender that typically relies on the Internet to transfer value from peer to peer. It is produced by mining or 'mining' and can be exchanged for other currencies such as the dollar and other cryptocurrencies like ether or bitcoin.


 
 

How are bitcoin futures settled?


In a centralized financial system, it is well understood how futures contracts are settled. A buyer who has bought a contract from a seller receives the underlying asset upon settlement. However, in the decentralized and pseudonymous system of bitcoin, this is not always the case: if someone purchases a contract and then sells it, there may be nothing to transfer to the new owner because nobody knows who holds the underlying asset.

 

How does bitcoin futures work?

Bitcoin Futures work almost just like the regular futures contracts, only bitcoin price is used instead of some other commodity price. To make crypto-trading easier, regular futures exchange provide a way to buy and sell contracts for bitcoin price.
A person who wants to short bitcoin will borrow a futures contract and sell it on the market. The borrowed position has to be marked-to-market daily. If the spot price (the actual market price) goes down, more money has to be added to the account as collateral in order keep the same margin. The profit or loss can be made when the future is eventually sold and there is no leverage involved.
 
  • Can you make money with bitcoin futures?

    The future of money is digital. So, it stands to reason that the future of trading currency is also going to be digital. And by "going to be," we mean it already is. Digital currency such as cryptocurrency is quickly gaining popularity, and a lot of people are starting to make money trading bitcoin futures. With more merchants accepting bitcoin as a form of payment, there is increasing demand for cryptocurrency futures contracts.
  • Additional Information about Bitcoin Futures

    This is the most important information about contracts for bitcoin futures. A contract for bitcoin (BTC) is an agreement to exchange BTC for an equivalent amount of fiat currency at a specific point in future. It is a kind of derivative product based on BTC, allowing investors to trade it on CBOE and CME exchanges just like stocks and commodities.