The Role of Crypto Futures Trading in the Crypto Market

crypto trading

Futures is a rather old trading method used to be applied for precious metals, gas, oil, etc. In the crypto realm, it involves predicting the price changes of crypto coins and entering into agreements to purchase or sell a specific coin at an agreed (month, 2 months, etc.) time and value. Simply put, it is speculation on crypto rates, formalized as contacts. These are futures agreements, and they can be traded on a large crypto futures trading platform such as Binance or WhiteBIT platforms. The crypto futures market is more complex than other markets and involves greater risks, however, it gives more earning options for those able to predict the market.

Benefits of Cryptocurrency Futures Trading

The role of futures crypto trading is intricate and has multiple facets. Below are some crucial aspects that provide insight into the same:

  • Market efficiency. Futures can contribute to market efficiency by providing liquidity and price discovery. With a big number of participants, it increases the overall trade volume and liquidity. It allows for smoother and faster execution of trades, reducing slippage and narrowing the bid-ask spread. Moreover, the constant trading and speculation in the crypto futures market help reveal information about market expectations, which can contribute to asset value.
  • This method gives traders a chance to speculate on the price direction and allows them to take long (buying) in case they anticipate a price hike or short positions (selling) if they perceive a rate drop.
  • Risk control. Futures agreements enable investors to protect against the volatility of assets. For instance, an individual possessing a significant amount of Bitcoin may choose to protect themselves from a potential price drop by entering into a short position. In such cases, the losses on the spot holdings can be offset by gains on the agreements.
  • Arbitrage opportunities between different markets. If there is a price discrepancy between the spot and the futures trades, traders can exploit this difference by simultaneously buying low in one market and selling high in the other.

The best way to learn crypto futures trading for beginners is to try it on a demo account, for example, you may use the WhiteBIT demo tokens and see how features work in practice without fear of losing real money. Visit the WhiteBIT website and see the wide range of earning options proposed for clients as well as the low fee policy and high level of protection for users’ information and money. WhiteBIT is a reputable exchange with a focus on a client. On the WhiteBIT blog, you have the opportunity to reach educational articles and tutorials on the mechanism of futures trading, so don’t hesitate to visit the blog.

About the Author: John Carter

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