Why Crypto Exchanges Are Competing to Offer Derivatives — Phemex

Bitcoin Futures enable you to speculate on what you think the price of Bitcoin will be in the future. They work in exactly the same way as futures on traditional investment assets.

You can take a long position if you expect the price of Bitcoin to rise; or if you own Bitcoin, take a short position to mitigate the impact of potential losses.

Each futures contract contains a specified amount of the traded product. CBOE Bitcoin Futures, for example, each contain one Bitcoin and are based on the Gemini crypto exchange’s auction price for Bitcoin, denominated in US dollars.

A key benefit of Bitcoin Futures is they can be traded on certain regulated exchanges. This could make trading Bitcoin more attractive to people who are nervous about dealing with cryptocurrency exchanges directly.

Entities that participate in Bitcoin futures are essentially making a bet on the price of Bitcoin over a specified period. Bitcoin futures work the same way as any futures contract on a traditional financial asset. Third, by granting Bitcoin more exposure to investors, more liquidity is added to the market.

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