BTCC is a renowned trading platform for traders to buy and sell Bitcoin holdings. Bitcoin, a cryptocurrency token is setting new financial standards in the market. It is a digital asset that is not regulated by a central administrator. It is a decentralized digital currency, the balances of which are stored on a public ledger with transparent access to everyone. Abbreviated as BTC, it has catapulted the launch of many other versions of cryptocurrencies. However, this blockchain-based commodity is gaining immense popularity and also the interests of many large institutions.
What are Bitcoin Futures?
A futures contract is a legal agreement to trade a commodity asset, or security at a set time in the future. This financial instrument aids trading regardless of the current market value. These derivatives work well with intrinsic holdings like Bitcoin, gold, natural gas, crude oil, and cryptocurrencies. All these commodities have their futures contract – Ethereum futures, Futures silver, Bitcoin Futures, Litecoin futures. Bitcoin Futures works similarly.
Here, the investors can speculate over the future prices of Bitcoin. Bitcoin Futures serve the purpose to hedge the market or mitigate the risks of underlying assets. Since Bitcoin is a volatile, yet dominant and invaluable asset at present, many exchanges are offering Bitcoin futures. To name some of them, FTX, Bybit, CME, Bakkt, BTCC, Binance, and Kraken. These companies as per their regulation give out Bitcoin Futures contracts on a daily or monthly basis. The most important thing to note is that no physical transaction takes place in Bitcoin Futures trading.
The benefits of Bitcoin Futures trading over Spot Trading
What is Spot trading?
Spot Trading in the cryptocurrency genre or any other form of the trading commodity is the most fundamental investment method. This requires you to buy the commodity (here, bitcoin) i.e. get yourself a holding and hold onto it until further selling it off. You will be possessing a Bitcoin, observing the market trend, analyzing the rise and
fall and when you decide to sell it that will determine the profit or loss margin incurred. To put it simply, you can take and settle trades instantly.
What is Futures Trading?
Under this, futures contracts are traded spontaneously. A buyer does not necessarily need to own the trading commodity (here, Bitcoin), unlike Spot Trading. Mostly, people speculate on the future prices of the commodity and sell it at a future date and time.
Advantages of Futures over Spot
- Owning an asset can be very risky, Under Futures, there is no compulsion for you to buy to secure your holding. Once you buy or invest in terms of getting the Bitcoin at hand, you profit and gain margins dive and rise in the same direction and rate as the prices. However, if you can gauge the trend lines, make inferences then you can save yourself from huge losses. You can shift and swing methodically, run short or long in the market by keeping a track of the spot values.
- Using Leverage and Margin
Leverage is an efficient trading tool for traders and investors to amplify their gain numbers. But, it can also pose potential loss threats. Leverage can be used by a well-experienced person to turn the volatility of Bitcoins to their advantage. Some get anxious about the irregularities, whilst others see an opportunity in price swings. For instance, Mike deposits $100 in an exchange that offers leverage of 1:6. This means Mike will be able to open a $600 worth of buy or sell position. If there is a 20% profit from Mike’s investment, he will earn $120. His account balance will have $220. However, if the market goes against his will with a 5% loss instead, Mike will lose $120. If Mike didn’t use leverage in this case, he would only lose $20, which is 20% of his total account balance. So, in all, there is a fair chance for you to be on any side.
You May Like Bitcoin Leverage & Margin Trading: How to Do It Right in 2021
- Margin is the minimum amount you need to deposit to speculate. This is not equal to the Bitcoin value. It is just a fraction of those holdings. Popularly known as maintenance margin, this is levied on all the speculators to avoid market liquidation. You will be promptly notified if the Margin value of your account drops below the minimum. This is a foundational rule to adhere to before participating in the speculations. The mathematical approach for margin calculation is described below:
- For example, in an exchange that can offer 6:1 leverage with a 15% margin, which means to open a $1,000 worth of buy and sell positions, you are required to have a deposit of at least $150 in your account.
How I went about making 10x profits?
To avoid risks initially, I wanted to try the daily futures contracts. But to get higher leverage and exploit my chances, I went with the weekly contracts. I made my deposit of $100 at BTCC under the crypto trading futures platform with a 50:1 (10x) leverage (although, BTCC allows you to go as high as 150x). I needed to keep a keen eye on the price trends. I installed a BTCC widget for this purpose. I set an alarm to a specific price rate, which would notify me whenever the Bitcoin prices reach there. Avoiding the hassle of navigating through the application, I could take full advantage of my leverage. And this is exactly what happened after a week. I gained 10x profits in just a week.
BTC trading or BTC futures trading offers its risks. It takes a good comprehension and examination of trends and price holdings to make a move. Since this underlying technology is new and still out of the understanding scope of many, it becomes easy to defraud and conceal deceptive transactions. One ought to do good research and take a step into this trading genre. The proper harnessing of the tools and financial derivatives can lead you to make considerable profit margins and go a long way into crypto trading.
Go for a free account on BTCC and try your first bitcoin futures trading. New users will receive up to a 2,000 USDT deposit bonus!
In addition to the English market, BTCC is also available in Korean, Japanese, and Vietnamese.