With time, crypto trading, especially bitcoin, is getting similar to how you trade stocks, bonds, and fiat currencies. Trading techniques like Futures contracts are being implemented in this mostly decentralized market, and results are quite impressive.
With trillions of dollars of trading volume, the bitcoin futures market is being adopted by all types and sizes of investors and traders. If you also want to know about it or how you can benefit from it, read this detailed guide till the end.
So, What’s Crypto Futures Trading Anyway?
Crypto Futures allow traders to get access to several digital assets based on blockchain like different tokens or coins without having to physically hold them. This is because crypto-based futures trading contracts operate just like standard futures contracts for commodities, stocks, index funds, and bonds, allowing traders to speculate on the future price.
In short, crypto futures contracts are simple agreements that let you buy and sell bitcoin at a specific date in the future for a pre-fixed price. Bitcoin futures contracts are mostly used by traders to hedge other investments in their portfolios.
What About Leverage Trading?
In financial markets, leverage simply means borrowing funds from the exchange to increase the size of your investment. The same rule applies to when trading crypto; you get leverage of your choosing, up to the size allowed by the exchange (typically 125x), and that’s multiple that gets added to your original trade size.
For instance, if you are making a trade of $100 with a leverage of 100x, then your overall trade size will become $10,000, and your profit on the trade will also be according to this size.
However, leverage comes with a risk. The bigger the size of a trade, the faster you will lose money on small movements. From the above given example, if your trade goes just 1% against your speculation, you would lose your $100, and the trade will be closed because the exchange never loses money.
Top 17 Crypto Futures Exchanges Compared:
- Binance Futures
Without a doubt, Binance is the world’s leading crypto futures trading platform with an emphasis on bitcoin futures trading to open both short and long positions. Binance allows traders and investors to trade cryptocurrencies against USDT with up to 125x leverage. These currencies include Bitcoin, Chainlink, Ripple, Ethereum, and more.
Getting started with Binance is a breeze and can be done from any corner of the world. The trading fees for Binance are competitive, and the volume is incredibly high, providing you with the best liquidity and lower spreads.
Furthermore, the Binance Futures Trading account integrates with its spot exchange, allowing you to transfer your profits between your futures and spot accounts.
Pros:
- Low trading fee
- Several payment modes
- Up to 125x leverage on over 50 crypto pairs
- Great liquidity and trading volume
Cons:
- Crypto trading pairs are with only USDT
Payment Methods: Bank Transfer via ACH, Credit Card, Debit Card, and Cryptocurrency
- FTX
FTX is one of the fastest-growing crypto futures trading platforms. It was founded by Sam Bankman, a renowned trader in the financial space. Bankman found the futures trading market gaps and actually filled them with FTX – a fast and easy-to-use platform.
The company is known for its low fees, a massive range of products, user-friendly options, futures trading and mobile app for Android and iOS with clean UI.
FTX offers 100x perpetual futures, leveraged tokens, a variety of altcoins, pairs in both USDT and USD, and all up-to-the-minute DeFi tokens.
Pros:
- Trade all kinds of DeFi tokens
- User-friendly, especially for beginners
- Very low trading fees & No market maker fee
- Mobile app for both Android and iOS
Cons:
- Beginners have access to leveraged tokens, which can be risky for them
Modes of Payment: Bank Transfer, Cryptocurrency, Bank Wire, USDT, and more
- Bybit:
A popular Bitcoin Futures trading platform that supports a range of altcoins as well. Located in Singapore, Bybit offers futures and perpetual contracts of up to 100x leverage, similar to FTX.
Bybit platform is very easy to use, the signup process is pretty straightforward, and they also feature a clean mobile trading app.
Pros:
- High trading volume and liquidity
- Very well-known brand
- User-friendly platform and mobile app
Cons:
- Don’t have a wide variety of trading pairs
Payment Methods: Bank wire, Bank Transfer and Cryptocurrency
- Prime XBT
With over 50 futures markets, including commodities, crypto, fiat currencies, stocks, and more, Prime XBT is one of the most diverse futures trading platforms online. They offer up to 100x leverage on different crypto pairs such as BTC and ETH, and it extends to 1000x for Forex trading pairs like AUD/USD, EUR/USD, and more.
PrimeXBT makes it super simple to create an account from any part of the world in just a few minutes, providing its traders and investors with high liquidity, a range of futures markets, and incredibly low fees.
Pros:
- Trade crypto futures, stocks, commodities, Forex, and more
- Competitive trading fees, especially for high leverage traders
- Up to 1000x leverage for Forex pairs & 100x for crypto
Cons:
- Not the best platform out there for strictly crypto futures traders
- Interface can be a little confusing for users
Payment Modes: Bitcoin, Bank Wire, and Cryptocurrencies
- dydX:
One of the largest decentralized crypto futures platforms built on the Ethereum Network for seasoned crypto traders.
dydX is geared towards advanced users allowing them to connect with the exchange using Ethereum wallets like Metamask and trade perpetual contracts with deep liquidity and up to 25x leverage.
Pros:
- Best decentralized exchange for trading futures
- Up to 25x leverage
- No KYC or on-boarding required
Cons:
- Fees can be a little high due to connection via Ethereum Network
Payment Modes: Cryptocurrency
- Perpetual Protocol:
If you’re looking for a perpetual contract exchange platform that’s also decentralized, then Perpetual Protocol is just what you need. It is built on the Ethereum Network and allows you to trade crypto, stocks, gold, crude oil, Ethereum, and more.
Because the Perpetual Protocol is on-chain (transactions occurring on the blockchain), it doesn’t need KYC or other verification; just sign up and start trading futures.
Pros:
- Excellent user privacy (which is the sole purpose of using crypto)
- Trade a lot more than just crypto, including oil, gold, and stocks
- Liquidity is pretty good for an on-chain futures exchange platform
Cons:
- Fees can be high because of on-chain transactions
Payment Modes: Cryptocurrency
- Kraken:
One of the securest and popular futures trading platforms for cryptocurrencies, Kraken was originally established as a spot exchange for Bitcoin by Jesse Powell, a well-known crypto advocate, in 2011. Since then, it has only gone forward to become one of the leading bitcoin exchanges in the industry.
Kraken Futures enables its users to trade different cryptocurrency futures, including Ethereum, Bitcoin, Ripple, and more, with up to 50x leverage. The reason Kraken is one of the safest platforms is that all user funds are kept in separate cold-storage wallets backed by Elliptic, which offers high-tech crypto security.
Pros:
- Very competitive fees
- Excellent security and data privacy measures
Cons:
- The user interface can be confusing
Payment Modes: Bank Transfer, Cryptocurrency, Bank Wire, and more
- Phemex
Founded by well-accredited and experienced wall-street investors and traders in 2017, Phemex offers both spot trading and Crypto Futures, including BTC and other currencies with up to 100x leverage.
The company leverages the HFT (High-Frequency Trading) technique allowing them to transact hundreds of thousands of transactions in seconds without a drop in performance or delays. This makes the platform very fast and reliable.
Pros:
- No KYC verification process
- Great mobile apps for iOS and Android
- Futures contracts for crypto and gold
- Low taker and maker fees
Cons:
- Customers from the U.S cannot use Phemex
Payment Modes: Bank Transfer, Cryptocurrency, SWIFT, and more.
- OKEx
Those looking for a variety of futures trading pairs and tokens should check out OKEx. It provides traders with a range of tools to help them optimize their crypto portfolio and fine-tune their trading strategies.
They are one of the leading exchanges with over $1.5 billion daily volume with just bitcoin futures exchange.
Pros:
- Highly liquid crypto exchange
- A massive range of trading pairs
- Offers both Futures and Spot exchange
Cons:
- Interface can be a little confusing for first-timers
Payment Modes: Bank Wire, Cryptocurrency, Bank Transfer, and more
- BitForex
When it comes to a one-stop digital asset platform, BitForex leads the industry with its massive range of trading pairs and support to over 180 countries. The platform offers spot trading and futures trading for Bitcoin and other cryptocurrencies but what separates it from the rest is that it offers insurance coverage for your digital assets kept on their platform.
Furthermore, with up to 125x leverage for over 300 trading pairs, you are getting a pretty sweet deal if you get into futures or even spot trading on BitForex.
Pros:
- Excellent security protocols with 2FA and IP detection
- Detailed graphs for better strategies with its Trading View feature
- 125x leverage and insurance coverage for assets on the platform
Cons:
- Relatively new, so trust can be an issue
Payment Modes: Bank Transfer, Bank Wire, and More
- Deribit
Deribit allows its users to trade BTC and other cryptocurrencies Futures along with other trading options. However, since it was initially built for sophisticated investors and institutions, it comes with a high barrier to entry compared to other futures trading platforms.
With Deribit, you get 100x leverage on crypto futures, but only on ETH and BTC pairs. The great thing about the platform is its highest Open Interest, which means a high number of futures traders on it.
Pros:
- Very high liquidity
- Both options and futures contracts
Cons:
- Interface can be a little complicated for newbies
Payment Modes: Bitcoin and Cryptocurrency
- CoinFLEX
CoinFLEX is one of the first crypto futures trading platforms where contracts are physically settled. They provide up to a whopping 250x leverage on the crypto futures and derivatives markets, along with flexible margins and deep liquidity on ETH, USDC, and BTC.
Pros:
- Crypto futures settled physically
- Up to 250x leverage
Cons:
- Not beginner-friendly interface
- There are better BTC futures trading options out there
Payment Modes: Cryptocurrency and Bank Wire
- CoinTiger
Based in Singapore, CoinTiger is a beginner-friendly centralized bitcoin futures trading exchange that has an easy to understand and navigate interface. Besides BTC, they also offer a range of altcoin pairs traded against USDT.
CoinTiger offers a lot of features to make an order as flexible as possible, including limit, market, profit & loss, and multi-trading types
Pros:
- Wide range of pairs against USDT
- Several order types for experienced traders
Cons:
- Relatively new platform in Singapore
Payment Modes: Cryptocurrency, Bank Transfer, and More
- Liquid by Quoine
Liquid Exchange was launched in the fourth quarter of 2018 and has emerged as the platform for all, allowing crypto futures trading to both expert and new traders.
Furthermore, you have the liberty to trade futures for more than 100 cryptocurrencies against different fiat currencies, including AUD, USD, GBP, HKD, EUR, and more.
Pros:
- Over 100 different cryptocurrencies
- Low fees that range from 0% to 0.03%
- Wide range of deposit options and fiat pairs
Cons:
- Not very well-known
Payment Modes: Cryptocurrency
- Poloniex:
With up to 50x leverage, Poloniex offers both futures and spot trading for a wide range of pairs against USDT. Currently, their futures trading platform allows you to trade Ethereum, Bitcoin, Bitcoin Cash, Bitcoin SV, Yearn Finance, Uniswap, and Chainlink.
Furthermore, they have an easy-to-use mobile app making it fairly simple for traders to open and close orders and access their accounts anytime and from anywhere. Poloniex is accessible to U.S traders as well, so those looking to trade on Etrade or via Fidelity can use it.
Pros:
- You get futures, margin, and spot trading
- Very popular pairs against USDT
Cons:
- Taker and maker fees are higher than the industry average
Payment Modes: Bank Wire and Cryptocurrency
- Bibox:
A crypto futures trading platform from China that allows you to trade 110+ cryptocurrencies via spot and futures trading.
Since they have loose KYC requirements, you don’t really have to go through a rigorous verification process to get access. Plus, you can also withdraw up to 2 BTC without providing any documents.
Pros:
- Wire range of cryptocurrencies
- KYC policies are not very strict
Cons:
- Crypto futures have only 2x leverage
Payment Modes: Cryptocurrency
- Gate.io:
Gate.io is the longest-running exchange based in China and offers a variety of crypto trading options, including spot, derivatives, lending, and futures. They have over 200 different crypto pairs against USDT and also nearly 400 different markets.
Like many BTC futures platforms, Gate.io also has low fees, but they are not the cheapest, with their trading fees starting from 0.2%.
Pros:
- Wide range of advanced features for experienced traders
- More than 200 cryptocurrencies with 400 markets
Cons:
- Fees are a little on the higher side
Payment Modes: Cryptocurrency
The Benefits of Crypto Futures Trading:
Price Direction Speculation:
Bitcoin futures trading allows traders to speculate on an asset with up to 100x leverage if they are feeling very confident.
If you believe bitcoin is going towards the $100,000 USD mark, you can actually put your money where your mouth is by leveraging long on a bitcoin futures trading platform of your choice.
It’s Understood by Big Players:
Big financial firms and Wall Street investors understand futures trading, which is why it is not a problem for them to get into bitcoin futures contracts.
This means more and more players will make these trades resulting in higher trading volumes, more liquidity, and lower spreads.
Using Stop Loss & Profit Limit:
If you’ve traded fiat currency in the past, you must have come across terms like Stop Loss and Profit Limit. These are the special orders that traders set on their trade if the price goes up or down according to their predictions. A trade gets closed with a stop loss if the price moves opposite to their prediction to stop them from losing all of their funds.
And if traders suspect the price will reach a certain point in profit and then go in loss, they put a profit limit, so the trade automatically gets closed at their predicted profit mark. These same trading techniques are now available to bitcoin traders thanks to futures contracts.
Know About the Fees When Trading Bitcoin Futures:
You may or may not have done spot trading in the past, depending on what your exposure to crypto trading is. However, futures trading is a little different, and some of the fees may include:
Trading Fee:
Just like spot trading, you will be charged a trading fee for bitcoin futures based on makers fee (for order creators) and takers fee (for order fillers). This can range from 0.0% to 1% or more depending on the exchanger you work with and the 30-day volume of your trade.
Extension Fee:
Since the futures contracts are fixed for a particular date, if you extend the bitcoin futures contract beyond the closing date, you might be charged a fee.
Leverage Fee:
When you margin trade bitcoin, you basically borrow money on your trades. There is generally some percent of interest attached to it that goes to the exchange.
Overnight Fee:
For certain bitcoin futures contracts, there will be a fee when the contract is kept open for some period of time.
Growth Potential of Crypto Futures Trading:
Crypto futures is one of the most solid investments bitcoin traders can make, and the above-mentioned benefits prove just that. Since big financial firms know about futures trading, institutional traders rushed to gain exposure to bitcoin trading after the launch of its futures contracts.
If we talk about the growth of the industry, then the major exchanges like CME and Bakkt have seen a massive surge in user base in recent years. Plus, the market trading volume just for bitcoin futures was around $1.06 trillion for 2020.
So it is no surprise that bitcoin futures are catching the attention of big American hedge funds mainly due to the explosive growth of the asset in recent years. And in the coming years, we might see more players, both individuals, and institutions, jumping into the bandwagon of bitcoin futures trading.
