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How to use Bitcoin futures

Last updated 25th May 2022
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When researching different ways to invest in Bitcoin, one term you’ll frequently encounter is Bitcoin futures.

If you’re not sure about what Bitcoin futures are or how you can use them, don’t worry; we’ve got you covered.

On this page, you’ll discover the best providers to trade BTC futures with and information about how to get started. We’ll cover much more, too, so keep reading to find out everything you need to know.

Best Providers to Trade BTC Futures in 2022

Since Bitcoin is the largest cryptocurrency globally by market share, it’s unsurprising that you’ll find plenty of places to trade BTC futures. If you’re worried about where to get started, fear not as we’ve collected the best providers and put them into the table below.

What are Bitcoin futures?

Bitcoin futures are a type of investment that give you exposure to bitcoin prices, without owning the underlying asset.

In essence, you are speculating on the price of Bitcoin using what is known as a derivative.

What are the types of Bitcoin derivatives?

If you’re thinking about investing in Bitcoin futures, it’s essential to first consider the different types of derivatives out there. Not all of them may fit your needs, so it’s crucial to research before you get started.

If you’re interested in finding out the difference between each Bitcoin derivative, the bullet points below will help you out.

  • Perpetual contracts: A perpetual contract is an agreement that has no specific end date, making this a helpful choice if you’re interested in long-term Bitcoin investing.

  • Options: Options give you the right, but not the obligation, to sell Bitcoin options at a particular price. Unlike perpetual contracts, options do have an expiration date.

  • Swaps: Swaps contracts usually have an expiration date. During its validity, you’ll swap money with another party. The aim is for both users to generate a profit.

  • Forwards: In effect, forwards contracts are an advance agreement. When you sign one, you agree to settle an asset on a specific date in the future.

How to choose the best exchange for Bitcoin futures?

When looking for a platform that offers Bitcoin futures, you’ll need to consider several factors and these will be outlined for you below:

  • Reputation: When investing in Bitcoin futures, or any other cryptocurrency for that matter, security is always the number one priority. Even if you don’t own BTC outright, you must consider the risk of scams and other threats. Make sure you pick an exchange with a good reputation and read customer reviews before signing up.

  • Trading Fees: Most crypto exchanges will charge fees for buying and selling Bitcoin, and this is no different if you use futures. Some will cost more than others, so it’s worth assessing all your options before making a choice.

  • Payment Methods: Most cryptocurrency exchanges will let you fund your account using a card or via bank transfer. However, if you want to use an alternative method like PayPal, your options are more limited. Make sure you pick a platform that accepts the payment solution that you prefer.

  • Verification Requirements: When you sign up for a cryptocurrency exchange, you’ll often need to complete a know-your-customer (KYC) check. This will involve submitting a copy of your passport or driving licence, along with proof of address — such as a utility bill. Most centralised exchanges will require these, but some decentralised platforms won’t.

  • Geographical Restrictions: Not all exchanges operate in every country. Make sure you check to see where you can and cannot use the exchange you signed up for.

  • Exchange Rate: When you use a fiat currency to fund your account, try to use your native currency where possible to limit exchange fees. Keep in mind that exchange rates between your currency and BTC might differ, too.

  • Support & Tutorials: If you’ve never invested using Bitcoin futures before, having access to tutorials and support is a good idea. Many platforms will offer free resources, and we’ve got plenty of content on our website for you to consume too.

  • Crypto Tax Software Integrations: When trading cryptocurrencies, you’ll need to pay tax in some countries. The easiest way to keep everything in one place is by using dedicated software. Some platforms enable third-party integrations, so it’s worth keeping a lookout for these.

  • Contract Types: As we already mentioned, Bitcoin futures contracts differ depending on the type you choose. Make sure you pick the best option for your trading style.

How to get started with Bitcoin futures?

Okay, so you’ve now got a good base level understanding of Bitcoin futures. Your next question will likely be how to get started.

Below, you’ll find a step-by-step guide to getting started with BTC futures trading.

Step 1: Consume as much content as you can from articles, podcasts, videos to complement your existing knowledge.

Step 2: Find a broker or exchange to sign up for, and create an account.

Step 3: Pass any necessary KYC checks.

Step 4: Fund your account using the payment method and fiat currency of your choice.

Step 5: On the exchange you choose, you’ll see something similar to “Futures Trading”. Choose this, then select Bitcoin and complete the necessary steps.

Where can you trade bitcoin futures?

Nowadays, several platforms offer Futures trading. We’ve listed an in-depth description of your best choices below.

Binance

Binance is the world’s largest cryptocurrency exchange and lets you trade over 300 cryptocurrencies, including BTC and Ethereum.

If you choose the Binance platform, you’ll find several useful features. One of these is a real-life price chart, which allows you to check the price of Bitcoin at any given time. You’ll also find round-the-clock support and cross-platform compatibility.

Binance supports several payment methods for deposits and withdrawals, including PayPal.

The Binance Futures platform enables you to choose between perpetual and quarterly contracts and several leverage options that can give you up to 75x your deposited amount.

While this can certainly increase your profits, it can also lead to more losses as well.

BitMex

When using BitMex, you can benefit from several features. These include viewing various coin markets in different tabs, along with low taker fees.

BitMex supports several payment methods. You can pay via wire/ACH transfer, as well as Visa and Mastercard. While the service doesn’t currently enable Apple Pay, you can use Google Pay or Samsung Pay if you have access to these.

With BitMex, you can leverage up to 100x during your BTC futures trading.

Kraken

Kraken is a popular exchange that offers markets for numerous cryptocurrencies, including Bitcoin, Litecoin, and Dogecoin.

When you trade BTC futures with Kraken, you’ll use Kraken Futures. One area of consideration, however, is that you need to make sure you’re eligible. For example, if you’re in the US or UK, you’ll need to find an alternative platform.

You can deposit into your account using a broad range of payment options. These include bank transfers and card payments. Depending on your method of choice and the currency you use, you’ll need to pay a deposit fee. Moreover, you must adhere to the minimum deposit limits.

With Kraken Futures, you can trade using inverse and vanilla contracts. You can use up to 50x leverage on most contracts, while maker and taker fees vary. For example, a 30-day volume between $0 and $100,000 would result in a 0.02% maker fee and 0.05% taker surcharge. These rates drop as your trade volume increases.

FTX

FTX is an exchange that offers trading opportunities for Bitcoin, Ethereum and other cryptocurrencies. You can use the platform to trade perpetual futures contracts, along with quarterly and index versions.

When you deposit on FTX, it’s worth noting that you’ll have to pay a $75 fee if your value is lower than $10,000. Therefore, you should look elsewhere if you’re not interested in trading that much. You can deposit and withdraw in several currencies, including USD, EUR and GBP.

You can add money into your account using your bank account, and the processing time will depend on the service you use.

With FTX, you can use up to 20x leverage. However, it’s worth noting that this value drops if you’ve got a larger contract. Considering everything we’ve said, we recommend using FTX if you’re a serious trader.

OKEx

OKEx supports more than 400 cryptocurrency pairings, making it one of the more comprehensive solutions on our list. You can choose to trade manually or use a trading robot if you have access to one.

OKEx offers options and perpetual swaps among many other services. Moreover, you can access charts to view price movements to help you make better trading decisions. The platform supports several languages, including English, French, and Russian.

The fees you pay will depend on your OKB holding, 30-day trading volume and whether you’re a VIP user or not. To be a VIP user, you need to have a trading volume in that period of $50 million+. For example, having less than 500 OKB and below $50 million in 30-day trading volume would result in a 0.02% maker fee and 0.05% taker fee.

What to consider when trading Bitcoin futures?

Earlier in this article, we discussed the top things to consider when picking a platform to trade Bitcoin futures on. However, the trading itself also has some important considerations.

Below, you’ll find a list of the top things to keep in mind when trading Bitcoin futures.

  • Price fluctuations/volatility: Bitcoin is highly volatile, and its price fluctuates regularly. If you’re trading futures, keeping an eye on price swings is especially important if you’re using high leverage.

  • Finding an exchange: Compared to other forms of cryptocurrency trading, finding BTC futures exchanges is a little more challenging. Therefore, the platform you use for regular investing might not work for futures.

Exchange contracts offered: As you’ve seen from the exchanges we’ve listed, not all of them will offer every kind of derivative product. Therefore, it’s worth looking around before making a decision.

FAQ

Can beginners use derivative exchanges?

Yes — you don’t need to be experienced to sign up for derivative exchanges. However, it’s worth noting that using derivative products can increase your profits as well as losses. Make sure you know what you’re doing.

Can I exchange futures for swaps?

Yes, you can exchange futures for swaps. Some exchanges will offer this, but others won’t — so you’ll need to do a little sifting around beforehand.

Can I use Bitcoin robots to trade Bitcoin futures?

Yes. Some platforms will let you use Bitcoin bots to trade BTC futures, with OKEx being one example.

Do I need a wallet to start trading Bitcoin futures?

No. Since you don’t own the currency, you don’t need a wallet.

What is the difference between Bitcoin futures and options?

BTC futures involves setting a price sometime in the future to buy or sell an asset. On the other hand, with options means you’re not obliged to buy or sell.

Danny Maiorca

Danny Maiorca

Danny is a freelance writer specialising in technology and finance. Prior to working for himself, he spent several years working within those sectors in London. Since then, Danny has relocated to Denmark.