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Crypto Futures Trading, Explained 

Crypto futures give users the opportunity to bet on the future price of bitcoin without having to actually own or handle it. 

What is Futures Trading?  

Futures are a type of derivative trading product. These are regulated trading contracts between two parties and involve an agreement to purchase or sell an underlying asset at a fixed price on a certain date. In the case of bitcoin futures, the underlying asset would be bitcoin. 

Futures allow users to hedge against volatile markets and ensure they can purchase or sell a particular cryptocurrency at a set price in the future. Of course, if the price moves in the opposite direction a user wishes, they may end up paying more than the market price for bitcoin or selling it at a loss. 

In some circumstances, instead of actually buying or selling a cryptocurrency like bitcoin directly, which involves setting up a crypto wallet and navigating through complicated exchanges, futures contracts allow users to indirectly gain exposure to bitcoin and potentially profit from its price movements. 

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How crypto futures trading works 

There are three main components to a crypto futures contract. 

Expiration date: This refers to the date when the futures contract must be settled. In other words, one party has to buy, and the other has to sell at the pre-agreed price. It’s worth noting, however, that users can sell on their contracts to other users before the settlement date if they wish. 

Units per contract: This defines how much each contract is worth of the underlying asset and varies from platform to platform.  

Leverage: To increase the potential gains a user can make on their futures bet, exchanges allow users to borrow capital to increase their trading size. Again, leverage rates vary greatly between platforms. BitMart Futures allows users to supercharge their trades by up to 100x.  

There are also two different ways futures contracts can be settled. 

Physically delivered: Meaning upon settlement, the buyer purchases and receives bitcoin. 

Cash-settled: Meaning upon settlement, there’s a transfer of cash (usually U.S. dollars) between the buyer and seller. 

In a nutshell, Futures trading refers to a method of speculating on the price of assets, including cryptocurrencies, without actually owning them. Like commodity or stock futures, cryptocurrency futures enable users to bet on a digital currency’s future price. Needless to say, Bitcoin or Ethereum futures are currently the most popular type of crypto futures contracts 

Cryptocurrencies are subjected to high market risk and volatility despite high growth potential. Users are strongly advised to do their research and invest at their own risk. BitMart will do its best to list only high-quality coins, but will not be responsible for your investment losses.

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