What are Futures in Crypto?

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What are Futures in Crypto?


Cryptocurrency trading has become a popular way to make a living. Digital assets are volatile, and there are many ways to profit from price fluctuations. There are many effective tools for trading, as well as trading bots, that help follow market changes and open positions in time. Large and reliable cryptocurrency platforms offer many tools for users, including crypto futures. In this article, we take a closer look at futures trading.

What is Crypto Futures Trading all About?

When trading futures, you enter into a contract to buy a crypto asset at a specific date in the future and at a pre-agreed price. Of course, this cryptocurrency trading instrument requires a good ability to predict future asset prices. To do so, traders must know how the market works and how it can affect the price of the asset.

Crypto futures allow traders to profit even if the market falls. In other words: if you are convinced that asset prices will fall in the future, you enter into a contract with a fixed rate on the lower price. If your prediction is correct, you will receive a profit on the day the contract expires. Predicting that the price will go down is called « going short »; predicting that the rate will go up is called « going long ».

What is the Role of Leverage and Liquidity in Crypto Futures?

When you trade futures, you are not necessarily buying the asset itself, but you are acquiring a position in some currencies in the future at a pre-agreed price. In this case, you can anticipate price fluctuations and demand, for example, 10, 20 or 50 times the price. This is called « leverage ».

Liquidity is an important indicator of the asset being traded. For example, if you choose to trade futures on Bitcoin, you will have a better chance of success because Bitcoin is very liquid. This is because there is always demand, and people buy when market trends go up and down.

Cryptocurrency markets are volatile and there are many opportunities to grow your investment portfolio, but also the risk of losing it all. Therefore, to trade futures you need to be a really experienced trader. There are ways to gain valuable skills in crypto futures trading – use the WhiteBIT demo account. It allows polishing your trading strategies, recognising all the pitfalls and gaps in your knowledge, and receiving priceless experience using different sizes of leverage in practice.