What Are Bitcoin Futures?
Bitcoin Futures allow speculators to engage in contractual deals to buy or sell respective to Bitcoin’s rise or fall into a specific period into the future.
Futures contracts are a magnificent tool to hedge or reduce the risks of underlying assets. And it works well for volatile underlying assets like Bitcoin and Gold among others.
Futures contracts have been in markets all along. It’s only in 2017 that Cryptocurrency futures, courtesy of Bitcoin hit the market first.
With Bitcoin, volatility is usually very high. The reason is Bitcoin has no central controller. Under central banks, Fiat falls under many injections of stimulus to move the volatility into controllable situations.
Bitcoin happens to be the leading digital asset – both in value and market capitation. Inherently, when Bitcoin futures fall into the picture, they contribute to diversity and risk mitigation factors.
As Cryptocurrencies feature in their decade two of their existence, many exchanges are offering Bitcoin and althorn futures. These include BTCC, Binance, Bitfinex, FTX, Bybit, and Kraken.
Trading on Bitcoin futures adds to the variety of spot and margin trading within the vast financial market industry.
The Benefits of Trading Bitcoin Futures
Trading Bitcoin futures contracts is gaining traction. You too can onboard with a few steps on the BTCC Platform.
And that brings me to the core advantages why I trade Bitcoin futures:
1. Benefits of Risk Hedging- against losses in value
Holding an asset when its value is falling is risky. Bitcoin futures allow speculators to make gains with the volatility in value.
If you hold Bitcoin, you lose as its prices nose-dive with time. A speculator holding a Bitcoin futures contract to go short will gain (as you lose).
And the reverse to the situation holds- a Bitcoin futures contract to go long wins you profits as the prices rise.
The gist here is a speculator with a futures contract that is not under any obligation to hold or deliver Bitcoin (or any asset) physically. The focus is on the spot value at any one time.
2. Make Money on Bearish Markets
Markets do not always trend upwards. With Bitcoin value making reversals over time, you can deploy a brilliant scalping strategy to win big profits. It requires that you also combine low leveraging techniques.
Every time Bitcoin slips in values, you’ll always be in the money. Ideally, if you are a day trader, you can close contracts without platform charges when our contract remains active.
3. Opportunity to High leverage
Platforms like BTCC give opportunities for Futures contracts, including Bitcoin futures on margin and leverage terms. With margin, you only provide a fraction of the entire trade value.
For instance, If your contract requires only 5% upfront, all the profits are earnings even if you get 200% or whatever per-cent in your favor.
Leverage is an excellent tool for professional speculators who want to make analysis and put in some amount to make earnings. At the same time, markets fluctuate into upswings or downswings.
For instance, if an investor has $1250, he can take ABC Inc. stocks, each going at $125. Another option is: open a futures contract holding 100 ABC Inc. stocks (where 10% margin for 100 units/stocks is $1250).
Take the assumption that the stocks of ABC Inc. rise by $10 for every stock they own. The earnings will be: 10*10 stocks = $100.
On the other hand, a holder of a futures contract will gain at 10X the stockholder’s value, courtesy of leveraging. His staking amount will be 10* $100 = $1000.
Here’s how I invest $100 of Bitcoin futures contracts on BTCC and close them with $1000 earnings weekly
It’s been an excellent year for Bitcoin prices. The bullish sentiment that picks all through the year 2020 has partially been a blessing in disguise for me.
I’ve been raking in $1000 weekly by trading Bitcoin futures contracts on the BTCC platform.
It’s simple. With $100, you open a Bitcoin futures contract to go long or buy.
Enter at a low price and exit at a higher price. But here’s the beauty with Bitcoin futures on BTCC:
Working With Leverage and Margin
Leverage allows you to commit a small amount, the margin to stake on a higher amount.
BTCC allows you to leverage with a 150X limit upwards.
I appreciate that because most platforms cap their leverage at 100X.
But the trick is to learn how to leverage optimally. Keep in mind that as much as leverage helps you win big, it also fixes you into losses if prices go adverse. Take leverage as a double-edge-sword.
Luckily, there are many tools to help you harness leverage to your advantage. Start with the trend.
I bet my wins on BTCC primarily arise from working with the trending direction of BTCC prices.
Here’s the mathematics in detail:
Once I open the Bitcoin futures contract, I pick leverage of 100X.
Therefore, my initial contract value of $100 comes with a multiplier of 100X.
In a better way, it’s an assumption to make it ($100X10) =$1,000
Best Way to use Leverage (The Double-Edge Sword)
Speculation is tricky for newbies. But mastering the direction of trend-lines with time makes the scene simpler.
The most uphill task for speculators is on how to use leverage.
Heavy leverage is beneficial; you can double your account within moments.
But, heavy leverage is riskier.
Finally, go for a free account on BTCC and try your first bitcoin futures trading today!
BTCC is the world’s longest-running crypto exchange offering leveraged daily/weekly / perpetual futures on 9 major cryptocurrencies including Bitcoin, Ethereum, Litecoin, and more. In addition to the English market, BTCC is now available in Korean (비트코인 선물), Japanese (ビットコイン先物取引), and Vietnamese (Hợp đồng tương lai Bitcoin).