Find out how Bitcoin Futures works and learn how to get started trading Bitcoin Futures.
Bitcoin futures track the price movements of the world’s largest digital asset, Bitcoin. It allows investors to gain exposure to Bitcoin without having to hold the underlying cryptocurrency. Like traditional futures contracts, Bitcoin futures are legal contracts to buy or sell Bitcoin at a future date.
Bitcoin futures offer protection against volatility and adverse price movements. Also, it is a proxy tool for traders to speculate on the future prices of Bitcoin. With a Bitcoin futures contract, you can take a long position if you expect the price of Bitcoin to rise. Conversely, you take a short position to reduce the impact of losses when the price of Bitcoin falls. When investing for the long-term, Bitcoin may experience occasional bear markets as sentiments change. In these uncertain periods, your Bitcoin portfolio is unlikely to gain very much, if any at all. In such scenarios, Bitcoin futures contracts can be useful to protect your Bitcoin investments against downside risk.
Benefits of Trading Bitcoin Futures
Bitcoin Futures offers the flexibility for non-Bitcoin holders to speculate on the price of Bitcoin and make quick profits. You can open a position in a Bitcoin futures contract with USDT, and any profits made will be settled in USDT.
Bitcoin futures contracts enable you to gain significant exposure to Bitcoin with only a fraction of its total cost. With leverage, you can magnify relatively small price movements to create profits that justify your time and effort.
Bitcoin futures are among the most liquid markets in the crypto economy, with trillions in monthly volume. A liquid market is generally associated with less risk because there is always someone willing to take the other side of a given position and traders will incur less slippage.
With Bitcoin futures, you have more options to diversify across trading strategies to generate more profits. Traders can now develop sophisticated trading strategies such as short-selling, arbitrage, pairs trading, etc.
Types of Bitcoin Futures
There are many Bitcoin futures markets today, and at Binance, we offer Bitcoin futures trading through two flagship products: Bitcoin Futures Perpetual and Bitcoin Futures Quarterly. These contracts differ in 2 main factors; Expiration and Funding Fees.
Bitcoin futures quarterly contracts on Binance follow the respective calendar cycle: March, June, September, December. For instance, a BTCUSD Quarterly 0925 contract will expire on 25 September 2020, 08:00:00 UTC. On the other hand, Bitcoin futures perpetual contracts do not have an expiration date.
Bitcoin futures perpetual contracts carry a funding fee. Funding fees are periodic payments to traders. Funding fees are paid peer-to-peer. Therefore, Binance takes no fees from funding rates as they happen directly between users. Depending on their positions, traders will either pay or receive funding.
Why Trade Bitcoin Futures on Binance?
Ideal for beginners since it has a simple user interface. Binance is a perfect choice for traders searching for the hottest cryptocurrency futures as the exchange supports the widest variety of altcoins.
High Liquidity & Volume
The largest derivatives exchange by volume and open interest. In January 2021, the exchange processed over $1 trillion in volume, dominating the derivatives sector with a 40% market share.
Secure & Safe
Strong emphasis on security, offering 2-FA and anti-phishing measures. Binance Futures also operates several insurance funds to safeguard users from adverse market risks.
With the integration of Binance Spot and derivative markets, Binance offers a complete ecosystem to fully utilize crypto assets and manage portfolio risks.
How to Sell/Short or Buy/Long Bitcoin Futures on Binance?
Trading in Bitcoin futures is easier than most beginners might think - all you need is a futures trading account. Follow this five-step process to buy or sell a Bitcoin futures contract on Binance:
Open a futures trading account on Binance. Please note that you must enable a 2FA verification to fund your futures account before you start trading on Binance Futures.
Bitcoin futures is an exciting and fast-growing market that attracts trillions of volume and liquidity worldwide. When deciding whether Bitcoin futures are for you, consider your risk tolerance and financial goals.