Mechanisms, Benefits, and Maximizing Profits in Cryptocurrency Futures Trading

The crypto ecosystem offers interesting instruments: cryptocurrency futures trading. These contracts allow investors to bet on the future price of digital assets, without having to actually buy them.

What is the mechanism, how does it work, and the benefits? You can see the detailed explanation in this article. This article will also explain the crypto futures event which will be held next November on Bitrue. So, if you want to maximize profits in the futures crypto with Bitrue, read this article till the end.

Working Mechanism of Cryptocurrency Futures Trading

Futures Crypto resembles futures contracts in general. Both parties, namely the buyer and seller of the contract, agree to transact at a certain price in the future. The asset at stake in these contracts is the fiat value of a particular digital asset. The transaction completion date is also determined when the contract is made.

Crypto futures contracts are traded on various exchanges, including Bitrue which offers Bitcoin and Ether futures contracts on margin.

History of Crypto Futures Contracts

Bitcoin futures contracts were first listed on the CBOE in early December 2017 but were later discontinued. However, in January 2024 the CBOE announced again trading Bitcoin futures contracts and Ethereum with margin. This makes CBOE "the first registered crypto exchange and clearing house in the US to offer both leveraged and spot derivatives trading on a single platform."

CME also launched Bitcoin futures contracts in December 2017. This contract is traded electronically on the Globex platform and is cash-settled. Bitcoin and Etherium futures contracts are based on the CME CF Bitcoin Reference Rate and the CME CF Ether Reference Rate.

CME also has reference rates for various other crypto assets, although futures contracts for these cryptos are not yet available for trading on their exchange. These reference rates are published for use by traders on other exchanges. Currently, there are 17 crypto asset reference rates, including Bitcoin and Ethereum, 4 DeFi token reference rates, and 3 Metaverse token reference rates.

Benefits of Trading Crypto Futures Contracts

The main advantage of trading Bitcoin futures contracts is that it offers regulated exposure to the cryptocurrency. This is an important point in a volatile ecosystem with wild price swings. In the US, Bitcoin futures contracts on the CME are regulated by the Commodity Futures Trading Commission (CFTC).

This offers a level of trust and protection for institutional investors, who make up the majority of traders in such contracts.

1. Simplicity: Bitcoin futures contracts also simplify the process of investing in Bitcoin. You don't need to create a Bitcoin wallet or place money in a storage and security solution when trading because there are no Bitcoin exchanges. An additional advantage of cash settlement contracts is that they eliminate the risk of physical ownership of volatile assets.

2. Safer than Crypto Holdings: Bitcoin futures contracts are relatively safer for dabbling in Bitcoin without getting burned because futures contracts have position and price limits that allow you to reduce your risk exposure to the asset class.   

3. Position Limits: Position limits differ between exchanges. For example, CME allows a maximum of 8,000 front-month futures contracts for Bitcoin and micro Bitcoin, and 8,000 for Ether and micro Ether.

Considerations When Trading Crypto Futures Contracts

The number of crypto exchanges offering crypto futures contract trading continues to grow, as does the number of participants and trading volume compared to other commodities. Trading crypto futures contracts has its peculiarities, such as:

1. Trading volume in crypto futures contracts can mimic the volume of their spot market counterparts. Price fluctuations can also be high, especially during periods of price volatility. During these times, crypto futures contracts may appear to follow spot market prices or trade at a significant premium or discount to spot prices.

2. Most exchanges are irregular. However, Some trading venues, such as CME, trade crypto futures contracts mostly on unregulated exchanges. Among the world's largest platforms for Bitcoin futures contracts, only CME is regulated by the CFTC.

3. Crypto futures contract options is a relatively new development. It functions like a standard options contract in that it represents the right, not the obligation, to buy cryptocurrency at a certain price at a future date. 

Maximizing Profits in Cryptocurrency Futures Trading with Bitrue

Bitrue will hold a special event for crypto futures in the next month. There are two categories that you can choose, namely:

1. Liquidation Security for New Futures Users

This category is specifically for new Bitrue users at the time the event takes place. To participate in this category, you must open futures positions worth 100 USDT or more in any currency pair during the event period with a leverage of less than 20x.

Later, you will get additional prizes by inviting friends to take part in this event. The rewards you can get are more than 40% rebate commission and 10 USDT in futures trial funds.

2. Trade Futures And Claim 25 USDT Futures Trial Funds

This second category can be participated by new users and existing Bitrue users. New users are required to trade with amounts more than 100 USDT in their first futures transaction to receive 10 USDT futures trial funds.

For old Bitrue users, you can complete the first stage of Novice and Experienced Trader tasks to claim an additional 15 USDT in futures trial funds.

Conclusion

Before joining crypto futures, you must do in-depth research first. The Bitrue website provides various complete features that can help you do research, starting from checking the price of a token, knowing the price conversion for example from BTC to USD, to find out about various projects that a token or network is working on by reading articles on the Bitrue blog.

By understanding the mechanics, benefits, and risks of trading crypto futures contracts, you can make wiser investment decisions.