Bitcoin futures have become the most popular derivatives products that allow people to gain exposure to the cryptocurrency’s wild volatility. Their popularity stems from the fact that crypto exchanges offering futures trading are extremely liquid, allow high leverages, and charge meager fees for their services. However, since the CBOE and CME platforms launched the Bitcoin futures trading in late 2017, several cryptocurrency exchanges are now offering the services. Thus, making it hard to determine the best crypto exchanges for futures trading. We will address this problem for traders in this post as we will look at the top crypto exchanges to consider when you want to trade futures contract.
What are Bitcoin Futures?
Futures are a contract to either buy or sell an asset (in this case, Bitcoin or other cryptocurrencies) at a set price in the future. When the futures contract closes, the buyer and seller are expected to abide by their obligations at the earlier agreed price, no matter the actual market price of the asset at the time of the contract’s expiration. The goal of futures contract trading isn’t always to earn profits. In some instances, futures are used in the financial markets to protect against negative changes in the price of the assets.
When you are using futures contract, you can either open a long position or a short position. For a long position, it means you agree to purchase the asset in the future at a certain price on the day the contract expires. When you take a short position, it means you agree to sell the asset at a set price on the contract’s expiration date.
Futures can also be deliverable and settled. For deliverable futures, the buyer would buy the asset at the expiration date of the contract, and the seller would sell the asset in the pre-agreed quantity. For settled futures, delivering the underlying asset is not part of the deal. Rather, it is a monetary calculation based on the amount of the difference between the contract prices at the value of the asset on the settlement date.
How do Bitcoin futures work?
The Bitcoin futures are pegged to the value of BTC. This means that traders bet on the BTC price to either rise or fall. With Bitcoin futures, traders and investors can speculate on the price of the cryptocurrency without actually owning it.
While Bitcoin remains an unregulated cryptocurrency, most of the crypto futures are traded on regulated exchanges. This is to calm the minds of people worried about the risk associated with trading futures on unregulated platforms.
The Bitcoin derivatives are similar to the futures for other traditional financial assets. The traders, who in this case are speculators, open long and short positions. Their positions depend on the outlook of the further price movement of Bitcoin.
Best Crypto Exchanges for BTC Futures Trading
Here are the top cryptocurrency exchanges where you can trade futures contracts.
Founded in 2014, BitMex has become one of the most popular cryptocurrency exchanges for trading futures. BitMex is popular for its impressive platform design and comes with a wide range of useful tabs. However, BitMex isn’t easy to use, and most of its features are not straightforward.
BitMex allows users to trade numerous cryptocurrency futures. The first and most important is the Bitcoin futures, which are traded in perpetual contracts. This implies that there is no expiration date for these contracts. The leverage for Bitcoin futures on BitMex is up to 1:100.
In addition to Bitcoin, BitMex also offers other futures trading for crypto assets including; Ethereum (ETH), Cardano (ADA), Bitcoin Cash (BCH), EOS, Litecoin (LTC), TRON (TRX), and Ripple (XRP)
1 Future Contract Cost: $1
Kraken remains one of the oldest cryptocurrency trading platforms that is still operational. They offer futures trading for Bitcoin, Ethereum, Bitcoin Cash, Litecoin, and Ripple. Kraken has numerous advantages when it comes to futures trading. They offer a leverage of up to 50:1 when trading the futures, and you entrust only 2% of your money to the exchange.
Kraken, which started futures trading last year, has a very intuitive platform with low latency and high throughput performance. They have a linked spot market that allows you to transfer collateral between the spot and futures markets seamlessly.
1 Future Contract Cost: $1
Binance is the leading crypto exchange by market cap and has a vast trading volume. The exchange ventured into the futures trading market in September last year. When you trade futures, liquidity is very important, and Binance is one of the most liquid exchanges in the world.
At the moment, Binance is offering Bitcoin futures trading and for other cryptocurrencies including ETH, BCH, XRP, LTC, TRX, EOS, AND ETC. However, it is expected that the exchange would roll out other cryptocurrencies very soon. Binance has one of the biggest leverages, 125X when you trade the Bitcoin futures on their platform.
Based in Singapore, ByBit has been one of the leading futures trading platforms since it was launched in 2018. ByBit offers crypto-based perpetual contracts. However, the platform primarily specializes in crypto-to-fiat perpetual contracts with leverages of up to 100:1.
In addition to Bitcoin, ByBit supports other cryptocurrency futures trading, including EOS, XRP, and ETH.
ByBit has become a leading futures trading platform because of its various features. It has a state of the art matching engine that processes up to 100,000 transactions per second. ByBit provides adequate security for customer funds. Also, deposit and withdrawal of funds are supported in BTC, XRP, ETH, and EOS.
Cryptocurrency futures trading is gaining popularity amongst investors. The crypto exchanges on this list are some of the best platforms to trade Bitcoin and other cryptocurrency futures contracts.