Jan 30, · "Cboe Plans December 10 Launch of Bitcoin Futures Trading," Page 1. Accessed April 18, Cboe Futures Exchange. "New CFE Products Being Added in March Update," Pages Accessed April. However, futures contracts offer ways for investors to make money off of movements in Bitcoin’s price without having to ever hold any Bitcoin directly. This can have a few benefits. One is that Bitcoin trading is currently unregulated or poorly regulated in many markets, but futures trading has much clearer rules surrounding it. May 07, · Averaging more than $5 Billion in daily trading volume, futures are one of the most liquid instruments to trade Bitcoin.. Popular Bitcoin futures exchanges like Bitmex, Deribit, and FTX enable its users to long or short BTC with up to x leverage.
Where to trade bitcoin futuresHow to Trade Bitcoin Futures | TD Ameritrade
Futures contracts contain an agreement to buy or sell a specific number of units of an underlying asset at a specific price and on a specific date—known as the expiration date. Counterparties are obligated to fulfill the terms of the contract upon expiration. Futures are very similar to options in several ways but differ mainly by the fact that futures obligate counterparties to fulfill the contract terms at expiration, whereas options give the contract holder the right but not the obligation to execute the terms of the contract at expiration.
As previously mentioned, futures allow investors to speculate on an underlying asset. Each Bitcoin futures contract specifies the number of bitcoin that needs to be traded at a specific date, execution of which will be directly handled by the exchange platform. The first Bitcoin futures product was launched back in December by CBOE Futures Exchange, allowing investors to speculate on whether the price of Bitcoin will climb or fall by expiration. Nowadays, Bitcoin futures can be traded on a variety of regulated exchange platforms, in addition to a few unregulated ones.
The great majority of Bitcoin futures are settled in cash, though an increasing number of platforms are beginning to offer physically-settled Bitcoin futures, which means they pay out BTC upon settlement. This can likely be attributed to the fact that at least initially, all Bitcoin futures were regulated by the Commodity Futures Trading Commission CFTC , making them much more attractive to institutional investors and hedge funds.
Similarly, Bitcoin futures also act to help to reduce the price volatility of what can otherwise be considered a volatile asset through more efficient price discovery. Although Bitcoin futures are widely acknowledged as a boon for the Bitcoin markets, they have often been met with criticism. For one, some argue that Bitcoin futures actually negatively influence BTC markets through price manipulation.
Likewise, because many Bitcoin futures are actually traded in and settled in cash, it can be argued that Bitcoin futures actually reduce the liquidity of the underlying Bitcoin market.
This might not be the case for long, however, since physically-delivered Bitcoin futures are now available from Bakkt.
With any Bitcoin futures contract, there is a buyer that agrees to sell BTC at a certain price on a certain date, and a buyer that agrees to buy it at that price on that date. On the flip side, traders that want to short Bitcoin would want to be the seller on a contract that settles at higher than the current price of BTC.
Four of the most well-reputed options are outlined below. BitMEX is one of the most popular Bitcoin futures platforms in operation and today and has become somewhat of a tour-de-force in the cryptocurrency space. Part of the reason BitMEX is so popular is due to its accessibility. Despite being unregulated, BitMEX operates easily one of the largest insurance funds of any Bitcoin futures trading platform—whether regulated or not.
To begin, create an account on the platform and click the verification link you will be emailed. Launched back in , Deribit was one of the first exchanges to offer Bitcoin futures and still remains one of the most popular Bitcoin futures exchanges today. Unlike BitMEX which offers futures for several different cryptocurrencies, Deribit has a sole focus on Bitcoin futures. As it stands, Deribit offers two Bitcoin futures contracts—one short term and one medium-term expiration.
Besides offering Bitcoin futures with two different expirations, Deribit also offers a Bitcoin perpetual swap product, which has no defined expiration date and differs from traditional Bitcoin futures in a few other ways. Deribit is known for its impressive liquidity, making entering and exiting positions a painless process.
Like all good Bitcoin futures trading platforms, Deribit also maintains an insurance fund that should cover the losses of any bankrupt traders. As far as derivatives trading platforms go, Deribit is also one of the simpler to use, making it ideal for those first getting to grips with trading Bitcoin futures.
To begin buying and selling Bitcoin futures on Deribit, you will first need to create an account and verify it. Once verified, login, click your username on the top right and select the deposit option.
Here you will find your deposit address, use this to load your account with the BTC you will use for trading. Bitcoin Guide to Bitcoin. Cryptocurrency Bitcoin. What Are Bitcoin Futures? Key Takeaways: As with a stock or commodities futures, Bitcoin futures allow investors to speculate on the future price of Bitcoin.
CME offers monthly Bitcoin futures for cash settlement. Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation.
Related Articles. Partner Links. Related Terms Bitcoin Bitcoin is a digital or virtual currency created in that uses peer-to-peer technology to facilitate instant payments. It follows the ideas set out in a whitepaper by the mysterious Satoshi Nakamoto, whose true identity has yet to be verified. Futures Futures are financial contracts obligating the buyer to purchase an asset or the seller to sell an asset, such as a commodity or financial instrument, at a predetermined future date and price.
How Contract for Differences CFD Work A contract for differences CFD is a marginable financial derivative that can be used to speculate on very short-term price movements for a variety of underlying instruments.
What Is a Futures Pack? Virtual currencies are sometimes exchanged for U. Their value is completely derived by market forces of supply and demand, and they are more volatile than traditional fiat currencies.
Profits and losses related to this volatility are amplified in margined futures contracts. I want to trade bitcoin futures. Can I be enabled right now? In addition to futures approval on your account, clients who wish to trade bitcoin futures must receive the CFTC and NFA advisories on virtual currencies provided below.
How can I check my account for qualifications and permissions? Am I able to trade bitcoin? We offer the ability to trade bitcoin futures contracts, much like we offer futures contracts for gold, corn, crude oil, etc.
Fair pricing with no hidden fees or complicated pricing structures. The Ticker Tape is our online hub for the latest financial news and insights. Here are a few suggested articles about bitcoin:. Bitcoin and Cryptocurrency Understanding the Basics. For additional information on bitcoin, we recommend visiting the CFTC virtual currency resource center.
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