{"id":6686,"date":"2020-02-13T09:56:27","date_gmt":"2020-02-13T09:56:27","guid":{"rendered":"https:\/\/qa-front.dev.techhub.cloud\/blog\/?page_id=3305"},"modified":"2024-04-17T12:22:49","modified_gmt":"2024-04-17T12:22:49","slug":"what-is-bitcoin-futures","status":"publish","type":"glossary","link":"https:\/\/paybis.com\/blog\/glossary\/what-is-bitcoin-futures\/","title":{"rendered":"Bitcoin Futures"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">The cryptocurrency space is gradually entering into its maturing phase and Bitcoin Futures is the latest proof to that. So, what is Bitcoin futures?<\/span><\/p>\n<h2><b>Bitcoin Futures Explained<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Although futures have their presence in the financial markets for a long time now, they have recently made their entry into the\u00a0<\/span><a href=\"https:\/\/thewebaddicted.com\/business\/blockchain-guide-use-cases\/\"><span style=\"font-weight: 400;\">crypto space<\/span><\/a> as well<span style=\"font-weight: 400;\">. Essentially, Futures stands for an agreement to buy or sell a specific asset at a pre-determined price on a set date in the future.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">When it comes to the popular cryptocurrency, Bitcoin Futures refers to an agreed contract to buy or sell bitcoin at a fixed price on a future date. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">The Futures contract allows users to speculate on the coin&#8217;s price in the future. Moreover, it enables the ability to trade in Bitcoin without actually owning or storing it.<\/span><\/p>\n<p><a href=\"https:\/\/www.investopedia.com\/terms\/f\/futures.asp\"><span style=\"font-weight: 400;\">Futures are an instrumental tool<\/span><\/a><span style=\"font-weight: 400;\"> for protection against market or asset volatility. As bitcoin is highly volatile by nature, futures allow an individual to mitigate risks and\/or take advantage of the price movements of Bitcoin.<\/span><\/p>\n<h2><b>How Does Bitcoin Futures Work?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Bitcoin Futures are more of a crypto-gamble. More specifically, an individual places a \u2018bet\u2019 on the price of Bitcoin.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Speculators have two options: <\/span><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"><strong>Either to go long<\/strong> &#8211; buying Bitcoin at a predetermined price,<\/span><\/li>\n<li><span style=\"font-weight: 400;\"><strong>or go short<\/strong>&#8211; selling Bitcoin at a predetermined price<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Let&#8217;s see how this works in an example.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Let\u2019s suppose that an investor owns 5 bitcoins at $9000. He has decided to go short (selling bitcoin) on a specific date in the future at $9000. Closer to the expiry date of the contract, if the price of bitcoin drops to $7000, the investor still won\u2019t incur any losses. The futures contract ensures that the investor can mitigate risks associated with the price volatility of bitcoin.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Alternatively, let\u2019s say that closer to the expiry date of the contract, the investor decides to go long (buying bitcoin) when the price has dropped to $7000. If the contract trades for $9000, the investor would have $2000 in profits by buying low and selling high.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The minimum investments and contractual terms differ for each exchange. However, in any case, the investor need not buy or store bitcoins. Additionally, bitcoin futures allow an investor to make profits by speculating on the price movements and not on the rise or drop of one BTC.<\/span><\/p>\n<h2><b>Bitcoin Futures Trading Advantages<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">The advent of bitcoin futures in the cryptocurrency industry is seemingly a step forward. There are a number of advantages to bitcoin futures trading as a financial instrument.<\/span><\/p>\n<ul>\n<li><b>Regulation &#8211; <\/b><span style=\"font-weight: 400;\">The contracts are traded on regulated exchanges thus driving mass adoption with institutional investors. Moreover, the aspect of regulation gives a chance for individuals to invest in Bitcoin and offer additional protection against fraud.<\/span><\/li>\n<li><b>Speculation &#8211; <\/b><span style=\"font-weight: 400;\">Bitcoin futures contracts allow individuals to trade BTC without having to own or store it. This is an advantage for investors who do not understand the complexities associated with storing the popular cryptocurrency.<\/span><\/li>\n<li><b>Leveraged Trading &#8211;<\/b><span style=\"font-weight: 400;\"> At the moment of this writing, Bitcoin is highly volatile. The aspect of leveraged trading helps the investor to benefit from price movements and also mitigate risks.<\/span><\/li>\n<li><b>Wider adoption &#8211;<\/b><span style=\"font-weight: 400;\"> Bitcoin futures brings a stream of institutional investors that would further drive liquidity into the markets.<\/span><\/li>\n<\/ul>\n<h2><b>Where Can I Trade Bitcoin Futures?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">In December 2017, the<\/span><a href=\"https:\/\/www.cboe.com\/\" target=\"_blank\" rel=\"noopener noreferrer\"> <span style=\"font-weight: 400;\">Cboe<\/span><\/a><span style=\"font-weight: 400;\"> became the first exchange to offer Bitcoin Futures contracts on its platform. In the same month, another exchange,<\/span><a href=\"https:\/\/www.cmegroup.com\/\" target=\"_blank\" rel=\"noopener noreferrer\"> <span style=\"font-weight: 400;\">CME (Chicago Merchantile Exchange)<\/span><\/a>,<span style=\"font-weight: 400;\"> started offering Futures contracts, providing investors greater exposure towards the Bitcoin asset class.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Both the exchanges are regulated by <a href=\"https:\/\/paybis.com\/blog\/what-is-cftc\/\" target=\"_blank\" rel=\"noopener noreferrer\">Commodity Futures Trading Commission (CFTC)<\/a> and are the largest exchanges offering BTC Futures contracts.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Last year, in 2019,<\/span><a href=\"https:\/\/www.bakkt.com\/index\"> <span style=\"font-weight: 400;\">Bakkt <\/span><\/a><span style=\"font-weight: 400;\">also started offering physical delivery based Bitcoin contracts on its platform. Major cryptocurrency exchanges<\/span><span style=\"font-weight: 400;\"> have now started providing Futures options as well.<\/span><\/p>\n<h2><b>What is Bitcoin Futures CME?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">The CME (Chicago Merchantile Exchange) is one of the largest Bitcoin Futures exchange. The settlements are either cash-based or made in U.S dollars. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">The execution price or the settlement of the contract is based on CME CF Bitcoin Reference Rate (BRR), which is calculated on a daily basis at 4.00 P.M. London time.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">While the cryptocurrency markets are open round-the-year, CME is open 6 days per week from Sunday to Friday. Due to greater volatility, the margin rates for a CME\u2019s contract are as high as 35%.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The minimum contract unit consists of 5 BTC, while contracts can go up to 100 Bitcoins. The contracts expire on the nearest 2 months in the March quarterly cycle (March, June, September, December) and the nearest 2 months outside of the quarterly cycle.<\/span><\/p>\n<h2><b>How to Buy Bitcoin Futures?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">An individual choosing to invest in bitcoin futures should consider whether the reason for investing is purely speculative or to hedge risk.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The buying and selling for Bitcoin Futures, along with the margins and contract terms, are different for each exchange. In the case of CME, the trading is done via its own website and through intermediary brokers.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For any individual looking to buy Bitcoin Futures, it is important to research the different contractual terms offered by exchanges. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Moreover, an investor should also understand the complete risks associated with leveraged trading. An individual should understand the volatility of bitcoin prices before choosing to make an investment in the market.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, it is undeniable that bitcoin futures have given a broader dimension to the cryptocurrency market. Moreover, the entry of regulated exchanges has given it an institutional makeover to bitcoin investments.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Bitcoin Futures refers to an agreed contract to buy or sell bitcoin at a fixed price on a future date.<\/p>\n","protected":false},"featured_media":0,"template":"","glossary_letter":[287],"glossary_term":[277,285],"class_list":["post-6686","glossary","type-glossary","status-publish","hentry"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What is Bitcoin Futures? Learn How to Use This Method - Paybis Blog<\/title>\n<meta name=\"description\" content=\"In this article we teach you what is Bitcoin futures and explain how you can trade with this particular method. Read on to find out more.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/paybis.com\/blog\/glossary\/what-is-bitcoin-futures\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What is Bitcoin Futures? Learn How to Use This Method - Paybis Blog\" \/>\n<meta property=\"og:description\" content=\"In this article we teach you what is Bitcoin futures and explain how you can trade with this particular method. Read on to find out more.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/paybis.com\/blog\/glossary\/what-is-bitcoin-futures\/\" \/>\n<meta property=\"og:site_name\" content=\"Paybis Blog\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Paybis\/\" \/>\n<meta property=\"article:modified_time\" content=\"2024-04-17T12:22:49+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/paybis.com\/blog\/wp-content\/uploads\/2023\/07\/og-individuals.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"630\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:site\" content=\"@paybis_com\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/paybis.com\/blog\/glossary\/what-is-bitcoin-futures\/\",\"url\":\"https:\/\/paybis.com\/blog\/glossary\/what-is-bitcoin-futures\/\",\"name\":\"What is Bitcoin Futures? Learn How to Use This Method - Paybis Blog\",\"isPartOf\":{\"@id\":\"https:\/\/paybis.com\/blog\/#website\"},\"datePublished\":\"2020-02-13T09:56:27+00:00\",\"dateModified\":\"2024-04-17T12:22:49+00:00\",\"description\":\"In this article we teach you what is Bitcoin futures and explain how you can trade with this particular method. Read on to find out more.\",\"breadcrumb\":{\"@id\":\"https:\/\/paybis.com\/blog\/glossary\/what-is-bitcoin-futures\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/paybis.com\/blog\/glossary\/what-is-bitcoin-futures\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/paybis.com\/blog\/glossary\/what-is-bitcoin-futures\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/paybis.com\/blog\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Glossary\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/paybis.com\/blog\/#website\",\"url\":\"https:\/\/paybis.com\/blog\/\",\"name\":\"Paybis Blog\",\"description\":\"A Tribute to Blockchain Tech and Cryptocurrency Adoption\",\"publisher\":{\"@id\":\"https:\/\/paybis.com\/blog\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/paybis.com\/blog\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/paybis.com\/blog\/#organization\",\"name\":\"Paybis Blog\",\"url\":\"https:\/\/paybis.com\/blog\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/paybis.com\/blog\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/paybis.com\/blog\/wp-content\/uploads\/2023\/01\/e60675e736aa42dcba29dde94f4efdf82a001656.png\",\"contentUrl\":\"https:\/\/paybis.com\/blog\/wp-content\/uploads\/2023\/01\/e60675e736aa42dcba29dde94f4efdf82a001656.png\",\"width\":268,\"height\":72,\"caption\":\"Paybis Blog\"},\"image\":{\"@id\":\"https:\/\/paybis.com\/blog\/#\/schema\/logo\/image\/\"},\"sameAs\":[\"https:\/\/www.facebook.com\/Paybis\/\",\"https:\/\/x.com\/paybis_com\",\"https:\/\/www.instagram.com\/paybis\/\",\"https:\/\/www.linkedin.com\/company\/paybis-com\",\"https:\/\/www.youtube.com\/c\/Paybis\"]}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"What is Bitcoin Futures? Learn How to Use This Method - Paybis Blog","description":"In this article we teach you what is Bitcoin futures and explain how you can trade with this particular method. Read on to find out more.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/paybis.com\/blog\/glossary\/what-is-bitcoin-futures\/","og_locale":"en_US","og_type":"article","og_title":"What is Bitcoin Futures? Learn How to Use This Method - Paybis Blog","og_description":"In this article we teach you what is Bitcoin futures and explain how you can trade with this particular method. Read on to find out more.","og_url":"https:\/\/paybis.com\/blog\/glossary\/what-is-bitcoin-futures\/","og_site_name":"Paybis Blog","article_publisher":"https:\/\/www.facebook.com\/Paybis\/","article_modified_time":"2024-04-17T12:22:49+00:00","og_image":[{"width":1200,"height":630,"url":"https:\/\/paybis.com\/blog\/wp-content\/uploads\/2023\/07\/og-individuals.jpg","type":"image\/jpeg"}],"twitter_card":"summary_large_image","twitter_site":"@paybis_com","twitter_misc":{"Est. reading time":"4 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/paybis.com\/blog\/glossary\/what-is-bitcoin-futures\/","url":"https:\/\/paybis.com\/blog\/glossary\/what-is-bitcoin-futures\/","name":"What is Bitcoin Futures? Learn How to Use This Method - Paybis Blog","isPartOf":{"@id":"https:\/\/paybis.com\/blog\/#website"},"datePublished":"2020-02-13T09:56:27+00:00","dateModified":"2024-04-17T12:22:49+00:00","description":"In this article we teach you what is Bitcoin futures and explain how you can trade with this particular method. Read on to find out more.","breadcrumb":{"@id":"https:\/\/paybis.com\/blog\/glossary\/what-is-bitcoin-futures\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/paybis.com\/blog\/glossary\/what-is-bitcoin-futures\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/paybis.com\/blog\/glossary\/what-is-bitcoin-futures\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/paybis.com\/blog\/"},{"@type":"ListItem","position":2,"name":"Glossary"}]},{"@type":"WebSite","@id":"https:\/\/paybis.com\/blog\/#website","url":"https:\/\/paybis.com\/blog\/","name":"Paybis Blog","description":"A Tribute to Blockchain Tech and Cryptocurrency Adoption","publisher":{"@id":"https:\/\/paybis.com\/blog\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/paybis.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/paybis.com\/blog\/#organization","name":"Paybis Blog","url":"https:\/\/paybis.com\/blog\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/paybis.com\/blog\/#\/schema\/logo\/image\/","url":"https:\/\/paybis.com\/blog\/wp-content\/uploads\/2023\/01\/e60675e736aa42dcba29dde94f4efdf82a001656.png","contentUrl":"https:\/\/paybis.com\/blog\/wp-content\/uploads\/2023\/01\/e60675e736aa42dcba29dde94f4efdf82a001656.png","width":268,"height":72,"caption":"Paybis Blog"},"image":{"@id":"https:\/\/paybis.com\/blog\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/Paybis\/","https:\/\/x.com\/paybis_com","https:\/\/www.instagram.com\/paybis\/","https:\/\/www.linkedin.com\/company\/paybis-com","https:\/\/www.youtube.com\/c\/Paybis"]}]}},"_links":{"self":[{"href":"https:\/\/paybis.com\/blog\/wp-json\/wp\/v2\/glossary\/6686","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/paybis.com\/blog\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/paybis.com\/blog\/wp-json\/wp\/v2\/types\/glossary"}],"wp:attachment":[{"href":"https:\/\/paybis.com\/blog\/wp-json\/wp\/v2\/media?parent=6686"}],"wp:term":[{"taxonomy":"glossary_letter","embeddable":true,"href":"https:\/\/paybis.com\/blog\/wp-json\/wp\/v2\/glossary_letter?post=6686"},{"taxonomy":"glossary_term","embeddable":true,"href":"https:\/\/paybis.com\/blog\/wp-json\/wp\/v2\/glossary_term?post=6686"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}