Futures

What are futures in crypto?

Futures are derivative contracts that allow traders to buy or sell an asset at a predetermined price on a specified date in the future. In crypto, futures are commonly used to speculate on price movements, hedge risk, or gain leveraged exposure to digital assets like Bitcoin or Ethereum.

How do crypto futures work?

Crypto futures track the price of an underlying asset but do not require traders to own that asset. Instead, traders enter into long or short positions:

• Long position: the trader believes the price will rise.
• Short position: the trader believes the price will fall.

At expiration, futures contracts settle based on the underlying asset’s price. Many crypto futures trade with leverage, allowing traders to control a larger position with a smaller amount of capital. Some exchanges offer cash-settled futures rather than physically delivering cryptocurrency.

How are futures used in the crypto market?

Futures serve several core purposes:

• Speculation: traders bet on price movements without holding the asset.
• Hedging: investors hedge exposure, such as protecting a BTC portfolio against downside risk.
• Arbitrage: traders exploit price differences between spot and futures markets.
• Price discovery: futures markets contribute to determining expected future prices.

Exchanges offer both dated futures (with expiry) and perpetual futures, a related product without an expiration date.

What are notable examples of futures in crypto?

• Bitcoin Futures on major exchanges: widely used by institutional and retail traders for hedging and speculation.
• Ether Futures: used around major network upgrades or expected market shifts.
• Cash-settled crypto futures: enabling institutions to participate without managing custody of digital assets.
• Futures used in spreads and basis trades: common in arbitrage strategies where traders exploit price differences between spot and futures markets.