Cryptocurrency & Blockchain Business
Sanchit Jain

How to Trade in Bitcoin and Altcoins Futures market

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Cryptocurrency trading is branching out and learning how to trade in Bitcoin and Altcoins futures market will bring an element of tradition to crypto-trading.

In this blog;

  • Learn how to trade in Bitcoin and Altcoin futures market with tips to succeed.
  • Find out what exchanges offer the best platform for the cryptocurrency futures market.

What Is Futures Trading?

In futures trading, a trader can place an order to buy or sell an asset like Bitcoin and Altcoins at a future price instead of the current market price. Unlike popular belief, the futures market is uncomplicated and simple to profit from. A few exchanges offer crypto-futures trading and you can learn more about them in this blog.

Why Is Bitcoin Futures Trading Trending?

  1. Futures trading does not require traders to actually own any Bitcoin or Altcoins. There is no need to setup a wallet or hoard the currencies. Crypto-exchanges offer the traders an option to directly purchase Bitcoins or Altcoins using fiat currency.
  2. Futures trading helps the cautious trader protect his/her cryptocurrencies from the volatility of the crypto-market. If traders suspect that a bear market is within view, they can “short” Bitcoin or Altcoins and acquire a net profit. Traders can even profit from a prospective bullish market without even holding any Bitcoins!
  3. Crypto-exchanges that offer futures trading are usually better regulated, thus, making these platforms safer and reliable than other exchanges.

How Can You Start Trading In Crypto Futures?

Bitcoin and Altcoins are considered as both currencies and assets; crypto-exchanges facilitate futures trading by considering these currencies as cryptocurrencies; FOREX exchanges like the IG Markets added cryptocurrencies to their currency pairs regarding Bitcoin and Altcoins as plain currencies; options exchanges trade contracts on the future price of Bitcoin and Altcoins, considering these as assets.

Therefore, there are three ways to trade in Bitcoin and Altcoin futures;

  • On cryptocurrency trading platforms as cryptocurrencies
  • On foreign currency exchanges as currencies and
  • Options exchanges as assets with contracts

Bitcoin and Altcoins futures trading is simply a process of making a prediction of the future value of these cryptocurrencies through market assessment with a similar range of features.

Features in Futures Trading

Crypto-exchanges usually offer the following features for futures trading:

  • Leverage: By providing leverages, crypto-exchanges help traders magnify their bets without making huge deposits. Leverages range from 5X, 10X to 100X; in other words, traders would be buying and selling Bitcoin and Altcoins at that many times their actual investment. Caution; leveraging can increase and decrease the profit margin.
  • Long and short: Going ‘short’ is to bet on a price drop while going ‘long’ is betting that assets may increase in value. These bets are referred to as bearish and bullish markets respectively in trader terms.
  • Limit and stop loss trading: By limiting price and time-period on orders, traders can either cash-out or cancel orders at whatever price, and whenever they wish.

Tips To Consider In The Futures Market

  • Altering regulations and legislations that impact Bitcoin and Altcoin prices
  • Institutional traders taking active interest in the market in 2018-2019
  • Supply and demand patterns of Bitcoin
  • Market manipulation from high volume Bitcoin holders called ‘whales’

5 Crypto-Exchanges That Offer Bitcoin And Altcoins Futures Market

  • BitMEX

Offers high leverage and has good liquidity, but the exchange is complicated for beginners with high withdrawal fees.

  • eToro

Highly professional website with easy verification, but there are very limited crypto-listings and no live chat.

  • Deribit

Provides insurance but only accepts Bitcoin; the design is not very user friendly.

  • OKCoin

High liquidity platform with many advanced trading options; however, foreign traders are not easily verified

  • PCEX

Extremely low fees, user-friendly with free broker support but still a new exchange.

The Bitcoin and Altcoins futures market indicate that there are many more bets on the assets going ‘long’ than ‘short’. The spike in prices of cryptocurrencies was attributed to the futures market by some experts in 2017. There are very high ‘bets’ that futures trading has been driving up crypto-prices and that it will continue to do so.

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