Dec 03, · Similar to any speculative investment, buying bitcoin carries some well-known risks: The price could drop precipitously and a single online hacking or crashed hard drive incident . Risks of losses Bitcoin futures are considered to be highly risky instruments due to potentially significant losses. If you are wrong with your price forecast, your money will flow out of your. Jan 04, · Hedge bitcoin exposure or harness its performance with futures and options on futures developed by the leading and largest derivatives marketplace. Now trading: Bitcoin options on futures In response to growing interest in cryptocurrencies and customer demand for tools to manage bitcoin exposure, CME options on Bitcoin futures (BTC) are now.
Bitcoin futures risksFour Problems With Bitcoin Futures
Education Home. Now live: ESG solutions. Manage the risk associated with renewable energies, environmental change and sustainable investments. Create a CMEGroup. Get quick access to premium educational content, including expert-led webinars, a real-time trading simulator, and more. Bitcoin futures and options on futures. Now trading: Bitcoin options on futures. Key benefits. Easily trade on your market view. Efficient price discovery in transparent futures markets. Subscribe for updates on Bitcoin futures and options.
Are you new to futures markets? You're in the right place. Learn more about what futures are, how they trade and how you can get started trading. Why Trade Futures. Latest trading activity.
Contract specifications. Bitcoin futures Bitcoin options Bitcoin futures View full contract specifications. Central Time Sunday — Friday. CT with a minute maintenance window Monday - Thursday from p.
This essentially means traders can open positions far larger than their balance by temporarily borrowing capital from the futures trading platform or other traders. Since most bitcoin futures trading platforms offer up to x leverage , this means traders can multiply their profits by up to x compared to trading without leverage. As a matter of fact, the most liquid Bitcoin futures achieve massively higher trade volume than Bitcoin trade volume on the most popular spot exchanges, such as Binance and Bittrex.
Because of this, traders can expect little to no slippage when trading, regardless of the prevailing market conditions, since most prominent bitcoin futures trading platforms have very low spreads even during times of high volatility.
This means you can focus more on your trading strategies, rather than worrying about dealing with slippage. Although Bitcoin futures have a huge number of benefits, it is still quite possible to lose money while trading them, particularly if traders neglect to maintain adequate caution.
Beyond this, Bitcoin futures also have their fair share of risks which can make them unsuitable for some traders—two of the main ones are outlined below:. Although trading Bitcoin futures on margin with leverage can multiply your exposure to beneficial price movements, it also works in the opposite direction and can multiply losses just as quickly.
As such, even small adverse movements can cause significant losses when trading with high leverage. Because all Bitcoin futures platforms enforce margin requirements to prevent bankruptcy and ensure that trade winners get their expected profits, traders are at risk of automatic liquidation if their account balance falls below the required margin requirement. Beyond this, traders also need to be aware of potential stop hunting—a strategy employed by large market participants to drive the price of an asset to a level that triggers the stop loss of small traders.
This is more of a risk on smaller, less liquid platforms and is mostly a concern for those trading with a tight stop loss , high leverage or both. As it stands, the large majority of cryptocurrency futures exchanges are unregulated. This means they are not licensed to offer futures products.
Since licensed platforms need to meet stringent guidelines on how user funds are handled and stored, as well as ensure they have a viable plan to remain solvent long-term, it stands to reason that unlicensed platforms might not adhere to these same quality standards. As such, there may be a higher risk trading on unregulated platforms, since traders have few protections in place should anything go wrong.
Pascal Thellmann is an algorithmic trader mostly focused on market making. You can get in touch with Pascal on LinkedIn or Twitter. CoinDiligent is the go-to resource for cryptocurrency traders. We write in-depth trading guides, valuable exchange reviews, and share priceless trading tips from top crypto traders.
Visit Platform. Start Trading on Bybit. CONS U. Start Trading on Deribit. Start Trading on Binance. Pascal Thellmann. Comments Hey Pascal, Very impressive overview you have made here. We are a new platform that just launched. We are curious to hear your thoughts on the platform Reply.
Get Started. A snowballing sell move could crash the entire market. Bitcoin exchanges, which provide a reference price for the asset, mostly work in unregulated markets. Without the overseeing hand of a regulator, they are subject to manipulation. Such outages could prolong trader losses and cut into their profits.
Typically, futures markets are precursors to price stability for a commodity because they draw in speculators and traders. Your Money. Personal Finance.
Your Practice. Popular Courses.