Crypto futures

A futures contract is an agreement to buy or sell an asset at a set price on a future date. Crypto futures let traders bet on the price of bitcoin or other coins rising or falling without holding the coins themselves; most are settled in cash or stablecoins.

Futures are used for two main reasons. Speculators use them to take leveraged long or short positions, and holders or miners use them to hedge, for example by selling futures to lock in a price for coins they will receive later. Regulated bitcoin futures trade on the Chicago Mercantile Exchange (CME), launched in December 2017, while most retail volume is on crypto exchanges.

The most popular crypto product is the perpetual future, which has no expiry date. Dated futures have a fixed expiry, and their price can differ from spot, a gap called the basis. Because futures usually involve leverage, positions can be liquidated quickly, and losses can be large.