What are Crypto Futures: A Brief Explanation

What are Crypto Futures: The industrial revolution had wholly altered and transformed the world. Similarly, the emergence of digital currencies seems like an enhanced version of that industrial revolution. These emerging digital currencies shook the whole finance market. Cryptocurrency is one of the highest revenue-generating currencies among other currencies. Many investors are eyeing cryptocurrency platforms Bitcoin Prime. Sign-up here for your investments to gain better economic benefits and to invest in a cryptocurrency, understanding its complex operations is of utmost necessity. Here is a brief about Crypto Futures.

Crypto Futures

What are Crypto Futures? Crypto futures are a contract which is signed between two parties or investors. The main objective of this contract is to predict the price of the cryptocurrency that could be in the future. Futures are endeavors to purchase or sell any underlying assets at fixed prices and specific dates. Bitcoin is the underlying asset in this instance of crypto futures.

The futures help the investors to acquire a wide range of options, opportunities, and publicity to hand-pick any cryptocurrency without actually buying them. They can be beneficial unless the price value moves against the investor’s aspiration; they may face loss at any phase.

Just like the standard future contracts for any merchandise, future crypto works on the price value of the original asset. In 2017, at the start of December, the Bitcoin futures were launched by Chicago Mercantile Exchange – a crypto exchange platform.

These future contracts have specific units, requirements, costs, and clearance methods. And, for an investor it is important to keep all these things in mind. 

The following are some of the policies related to the Bitcoin Futures contract:

  • Unit: 5 Bitcoin
  • Value estimation: US dollars
  • Working duration: 5 to 4 PM Every Sunday to Friday
  • Code: BTC
  • Requirements: 50% cash
  • Contracts: For six months and two Decembers

Significant Features of Crypto Future Contracts

There are some salient features in every crypto futures contract, such as:

  • Termination Date 

Every future crypto contract must be settled with an expiration date. The seller has to sell at a fixed price.

  • Units per Contract 

This means that the amount of value each contract holds in its underlying asset and the values may vary on every other platform. E.g., one CME Bitcoin futures contract equals five bitcoins, and one bitcoin futures contract on Deribit corresponds to up to 10 US dollars’ worth of bitcoin.

  • Leverage

It is beneficial that the exchanges permit users to borrow capital to increase their trading magnitude. The rates vary among different platforms. Kraken permits its operators to boost their trades up to 50x, while FTX dropped its leverage rates from 100x to 20x.

  • Expenditure Methods

Either crypto futures contract can be settled as the buyer buys and gains bitcoins, or there is a transmission of cash, generally in US Dollars, between both parties. 

Where to Invest in Crypto Futures?

The following Bitcoin Future trading platforms are predicted to be the most popular in 2022 by the cryptocurrency analysis firm Skew.com:

  • Binance: Bitcoin futures trading volume: $4.32 billion.
  • Bybit: Bitcoin futures trading volume: $2.30 billion.
  • CME: Bitcoin futures trading volume: $2.24 billion.
  • OKX: Ranked as one of the finest crypto exchange platforms that is somehow not available for the US traders. 
  • FTX: A recently developed firm in the world of crypto trading.

Advantages of Crypto Futures

The main benefit of crypto futures is, they give cryptocurrency a flexible and useful disclosure. Investors discover easy exposures that give them certainty and confidence in this always altering economic environment. Some advantages of crypto futures include the following:

  • Accessibility

Investors can finance bitcoin futures without having to generate any Bitcoin wallet. Future contracts sanction them to acquire exposure indirectly to Bitcoin and gain revenue from the price’s fluctuations. 

  • Security 

Bitcoin futures contracts are comparatively safer than experimenting with Bitcoin with zero repercussions due to the proper positioning and limited price assortment of the futures contracts. Hence, why investors can decrease the risk amount to their assets.

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