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Best place to trade Bitcoin futures

place to trade Bitcoin futures

May 15, 2021 | 

JOHN K MWANIKI |  0 Comments| 

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Get Into Cryptocurrency Trading Today

By now, you are well aware of Bitcoin, how it works and why many people are flocking to invest in them and other cryptocurrencies. However, some people do not have the risk appetite for cryptocurrencies mainly because of the highly volatile market movements or do not have the money to buy Bitcoin at their current value. Such people can still invest in Bitcoin by investing in Bitcoin futures. 

What are Bitcoin futures?

Bitcoin futures are futures contracts on Bitcoin that are settled in cash. They allow investors to invest a fraction of their money (margin) on a contract that predicts the movement of the price of Bitcoin in the future. A trader that goes long will predict that the future price will be higher than the spot price and vice versa for the trader that will go short. This is just a rudimentary explanation of how bitcoin futures work. The principal reason they are gaining popularity is that they act as a hedge against future market conditions. 

 Where to trade Bitcoin futures

If you are interested in trading Bitcoin futures and wondering where to go to trade Bitcoin futures, this list has got you covered. Here are seven places you can trade Bitcoin futures  

a.    Chicago Mercantile Exchange (CME) group

CME is an organized exchange where traders can trade futures and options in many sectors, from agriculture to real estate. The CME Group offers cash-settled bitcoin futures that are based on the CME CF Bitcoin Reference Rate (BRR). The CME CF BRR is a daily reference rate of the price in USD of one bitcoin. The contract size offered is smaller, which makes it available for both institutional and retail traders. 

b.    Binance Futures

This futures trading platform was released by Binance, and since then, it has grown to become one of the most popular crypto futures and Bitcoin futures trading platforms. You can opt to go short or long, and you have the chance to open your position with up to 125x leverage. Their low trading fees and deep liquidity are a bonus.

The platform is beginner-friendly, meaning even new traders can learn how to trade futures contracts. They have integrated Bitcoin Futures with their spot exchange, meaning that you can transfer your profits back and forth between the accounts.   

c.    ByBit

ByBit is a well-established derivative cryptocurrency trading platform. It is steadily growing towards the title of the best futures trading platform and for several reasons. They have low trading fees, great and stringent security measures, and a great reputation preceding them. Their customer support team is also fast and efficient. They have emphasized leverage and allow traders to open trades with up to 100x leverage. 

d.    Kraken

Kraken is a well-known cryptocurrency exchange, and they too have a crypto futures trading platform. Besides Bitcoin futures, you will find other crypto futures, including XRP futures and Ethereum futures. Traders are allowed to open positions with up to 50x leverage. They offer a competitive fee structure and store all user accounts in cold-storage wallets for improved security. Their user interface may not be very user-friendly for new users.

e.    BitForex

If you are looking for a one-stop-shop, BitForex may be the platform for you. That’s because they offer several digital assets services, including spot trading and futures contracts trading. They allow their users up to 125x leverage. Though their fees are a little high compared to some platforms featured in this list, BitForex has one winning feature; they offer insurance over assets on the platform. Few platforms offer insurance which sets them apart from most platforms. 

f.    OKEx

OKEx is a  Bitcoin spot and derivatives exchange around. Traders can trade with hundreds of futures trading pairs and tokens. When trading futures on OKEx, you can choose between standard future contracts or perpetual swaps for some cryptocurrencies. On their software, you will find both the current and historical market data and futures trading charts. Analysis of this information will help you make more informed decisions to increase your chances of success. 

g.    Bitnomial exchange

This Bitcoin derivatives exchange has its headquarters in Chicago and allows traders to trade in Bitcoin futures and options. Trades on Bitnomial are settled physically; they result in the exchange of fiat and digital assets. It is regulated by the Commodities Futures Trading Commission (CFTC). Those traders who trade on margin can rest easy as trades on margin are backed by a Futures Commission Merchant (FCM) at a US CCM (central clearing party). Because of regulation, it is easy for traders to trust Bitnomial. 

Future contracts trading risk

Many people get excited when they see that their exchanges offer significant leverage if you chose a brief time span. However, the reverse is also true. It is quite possible to lose a lot of money (sometimes even more than you had invested in the markets turn against you.

Traders who trade futures contracts on stocks may not fear this as much, but losses are very likely in crypto futures as price moves on crypto charts tend to be very volatile. For that reason, every trader should accept leverage with a lot of caution. Do your research and base your forward price on valid data and analysis, not speculation, as the market could go against you quickly. 

Conclusion

Future contract trading is an excellent way for traders interested in trading in cryptocurrencies, but it is advisable to do so within their set limits. Future contracts are a great hedge against the often volatile movements of the cryptocurrency markets. A good platform can make you money by letting you invest in cryptocurrencies without holding any cryptocurrency coins in a wallet. Be sure to thoroughly investigate your platform of choice to get the best deals and find the platform that best suits your needs. 

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