May 07, · What Are Bitcoin Futures? Bitcoin futures are a type of derivatives contract designed to offer traders increased trading flexibility and precision. As Bitcoin derivatives, these contracts track the underlying value of Bitcoin and describe the terms of an agreement between two parties—a buyer and a seller. When the contract expires, the seller will be obligated to sell an agreed quantity of. Bitcoin is a large portion of the growing digital asset market. BTC futures provide investors with transparency, price discovery and risk management capabilities. The contract will also allow individual market participants to access the bitcoin market as well as hedge any direct exposure to bitcoin pricing. Bitcoin futures trading is available at TD Ameritrade. Quotes and trading capabilities for these futures products are available on our thinkorswim trading platforms.
Bitcoin market futuresHow to Trade Bitcoin Futures | TD Ameritrade
The third halving saw the network incentives or block rewards fall to 6. In normal markets, lower supply with steady demand usually leads to higher prices.
With bitcoin supply reduced, halving has the potential to push the price up, theoretically to double the pre-halving level.
In previous years, the price of bitcoin started rallying 12 months ahead of the reward halving and continued for some time after. A similar pattern played out in July when bitcoin was gaining greater mainstream recognition and coincided with the first boom in initial coin offerings.
The impact of Covid has resulted in lower volumes as some participants focused on larger adjacent non-crypto markets and some mining operations being impacted by these difficult market conditions. Previously, miners typically sold their bitcoin for fiat currency as they earned it to pay for operational costs. Mining is now dominated by professional mining companies seeking a profit.
With lower rewards they may decide to hold onto their bitcoin until a new price forms that compensates them for their expenses. The halving could force a shakeup of the mining landscape. For the first time there is a robust derivatives market for bitcoin in both futures and options.
In previous halvings, market participants could only express their views on bitcoin through the spot market. At the time of the last halving in , miners could either hold on to their block rewards or they could sell them in the spot market to pay for operating costs.
This constant selling meant that price appreciation was measured. After a halving event, as miners would have fewer bitcoins to sell, there would be less selling pressure, meaning the price would go up. Now, with a liquid derivatives market, it is possible to hedge and lock in future bitcoin prices in order to cover expenses without selling bitcoin. Those needing support will find a comprehensive help center, which covers most basic concerns and provides in-depth educational material, while direct customer support is available via live chat and email.
For security, ByBit stores almost all user funds in cold storage , and offers several customer-side security features, including multiple two-factor authentication options, in addition to a detailed log of recent account actions e.
ByBit also keeps its trading fees plain and simple, charging a 0. Beyond this, customers may need to pay a variable funding rate, which is clearly displayed in the contract details panel of the trading interface. Users can trade with up to x leverage and the exchange stands out for not requiring KYC. As it stands, the platform is the most popular Bitcoin futures exchange, and its XBTUSD perpetual futures contract typically sees more volume than similar products anywhere else.
In terms of leverage, its BTC perpetual swap can be traded with up to x leverage, though most other contracts are between x max leverage. When it comes to fees, BitMEX charges a 0. Traditional futures, on the other hand, have a 0. A variable funding rate is exchanged between the shorts and longs on BitMEX. The BitMEX user interface can seem daunting at first, particularly for newer traders, but this complexity does bring with it a wide variety of different order types and useful information needed to assess the market.
This, complicated UI is somewhat offset by the wide variety of educational content and guides offered by the platform. Deribit full review is a derivatives trading platform that offers a huge variety of options contracts, in addition to futures for both Bitcoin and Ethereum.
The platform is one of the few exchanges to offer leverage for options products but does require KYC for higher volume users. Like most of the platforms already listed, Deribit features a variety of cryptocurrency futures products, including a perpetual futures contract for both Bitcoin and Ethereum.
These are tradeable with between x leverage. However, what sets it apart from the competition is its focus on crypto options, since the platform offers a huge number of options for both BTC and ETH, with a variety of different expiry dates and strike prices, available to trade with 10x leverage. The platform interface is relatively simple to navigate, with robust charting features provided by TradingView , in addition to a good range of order options—catering to traders of all experience levels.
Beyond this, traders may need to pay a variable funding rate, which is shown in the trading interface after selecting a contract. Deribit clearly places a strong emphasis on security and has never been hacked in its more than three years of operation. OKEx is a Malta-based cryptocurrency exchange and futures trading platform that supports a huge variety of coins. On OKEx, users will find a range of futures, perpetual swaps, and options, some of which can be traded with up to x leverage.
As it stands, OKEx is among the most popular exchange platforms, and currently serves more than 20 million customers in over countries. Unlike most Bitcoin exchanges, OKEx offers both spot and derivatives trading functionality and supports a wide variety of different cryptocurrencies and tokens. Users can also deposit through wire transfer or credit card to buy Bitcoin and other cryptocurrencies with fiat at reasonable prices.
Additionally, OKEx has some of the lowest fees in the market—with a 0. These can be reduced for higher volume traders and OKB token holders. The website is relatively easy to navigate, and the spot, futures and perpetual swaps platforms are all accessible to beginners and experts alike. Customer support is also readily available, since OKEx offers both phone support and email-ticket support, in addition to a well-polished help center.
Overall, the platform is considered an extremely safe place to trade Bitcoin, as the exchange has never been hacked—using a combination of cold storage wallets and distributed server clusters to stay that way. This is a baked-in feature of the commodities market, due in part to relatively inelastic supply and pricing based primarily on market demand.
While this model works quite well in the steadier stock market, it would prove difficult on a commodities exchange. The price of coffee alone has fluctuated by more than percent in the past 10 years. In the past year, it has jumped by 12 percent before diving by 30 percent, before ticking back up by five. Trying to resell a barrel of coffee beans as a traditional investor would be problematic. This uncertainty is inherent to bitcoin trading as well since the market is driven by a considerable level of speculation.
To deal with this, commodities traders rely on futures contracts. A futures contract allows the trader to invest specifically in volatility. Instead of having to predict the right price at which to sell, a futures trader invests in price direction. For instance, in buying bitcoin outright, a trader would have to choose a purchase price and then decide at what price to sell.
Both of these involve precise decision-making and timing. This is tremendously difficult to pull off in the unpredictable bitcoin market. A futures contract would allow a trader to peg a future price point. At the time of writing, bitcoin has a day volatility estimate of 3. In raw terms, the price of a single bitcoin has swung by thousands of dollars within the last year. This makes it hard to predict how and when, exactly, to sell your bitcoin. As with all commodities, the risk is always there.
If you sell too soon, you may miss out on riches; sell too late and you may take a bloodbath. A futures contract helps with that as it does not cap potential gains. Trades are made on direction and volatility, not price prediction. There are few, if any, easy ways to make money off falling prices when you hold an altcoin. For this reason, markets like bitcoin tend toward speculation bubbles.
Traders only have one option: buy low and hope to sell high, creating a speculation feedback loop which inflates the value of the altcoin. For a highly volatile asset, this opens up far more opportunities to profit.