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What is Cryptocurrency Futures?

Many people may know about cryptocurrency, but they may not know much about cryptocurrency futures. For digital currency, futures may be a constraint. With the existence of bitcoin futures, the price trend of digital currency will be stable. But what is digital currency futures? What are the characteristics of it? Let's take a look!


1. Definition of Digital Currency Futures 

The concept of futures is not the same as the spot. In general, the spot represents the real tradable goods. Futures is not merely goods, but includes a variety of standardized tradable contracts. In futures trading, transaction can be made among certain commodities, financial instruments, or in other broader trading ranges. The contract or agreement for buying and selling futures is called a futures contract. The market for digital currency futures trading is also known as the crypto futures market. The concept of futures originated from Europe. The first modern futures exchange was founded in 1848 in Chicago, USA, and later futures trading market spread to other countries in the world. Get to know more rules of crypto futures trading. (cryptocurrency exchange rules)


Bitcoin Futures Trading


2. Characteristics of Digital Currency Futures Trading 

1) Two-way Profits

One of the biggest differences between futures and the spot trading is that futures can be traded in both directions, which means you can open long or open short in futures trading. That is to say you can make profits no matter the price of the cryptocurrency rises or falls. That is also why there is no bear market in futures trading. (In the bear market, the spot market may be sluggish, while the futures market remains the same and the opportunity to earn money is still available.) 


2) Leverage 

Cryptocurrency leverage trading is the fascination of futures investment. In futures trading, you don't need to pay in all your trading money. In some crypto exchanges you can only pay 5% of your trading funds as the margin to open a position and enter futures trading. Due to the use of margin and leverage ratio,  you can enter a 10x greater trade. (There is a chance to earn money with small capitals) 


3) Doubled Opportunity 

Futures is a "T+0" transaction, so that you can fully use your funds. When you have predicted the trend of rising or falling, you can start trading or close the position at any time you want. (It's convenient for you to buy in or sell out at any moment.) 


4) Greater than the Negative Market 

The futures market itself will not create benefits and it requires constant capital flow to drive the entire market, in which the transaction costs and the total amount of funds remain unchanged. In other words, the futures market is a zero-sum market, the number of winner or the amount of profits equals to that of loser or the amount of loss. When getting into bear market, along with the market price shrink sharply, and the dividend will be relatively meager. 


All of the above is an introduction on digital currency futures. There are many uncertain factors in the crypto market. Facing the downturn in crypto market, bitcoin futures may be the dawn, urging crypto market value to meet the investment expectations.


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