🚨 Bitcoin spot versus futures contracts: Why are futures contracts the only ones being liquidated?

🔥 In the market $BTC , the investor buys real Bitcoin and actually owns it in their wallet; in this type of trading, the concept of liquidation does not exist, because you do not borrow money and do not use leverage. Even if the price drops sharply, you remain the owner of Bitcoin.

🚨 Futures contracts do not mean actually owning $BTC , but betting on its price movement upwards or downwards, often using leverage. Here lies the fundamental problem: the trader opens a position with borrowed money from the platform, and if the price moves against their expectation by a certain percentage, the loss could consume the entire deposited margin. At that point, the platform automatically closes the position to protect its funds, which is known as liquidation.

🔥 This is why we see that liquidation occurs only in futures contracts and not in spot. The market does not “punish” the trader, but imposes strict rules for risk management when using leverage.

🔥 This is also where you learn why spot is halal and futures are haram; spot is buying and owning $BTC , while futures are betting on the price (gambling) and leverage is usurious lending.