Difference Between Crypto Futures Market and Spot

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As the cryptocurrency industry develops, more and more people want to be a part of it. Trading and investing in cryptocurrencies is a great short-term profit option that attracts many beginners and crypto enthusiasts. Large trading platforms provide convenient tools for high-quality and successful investments:

  • Bid
  • Place
  • Profit
  • futures
  • Use.

On the WhiteBIT platform, you can practice all these financial instruments. Consider two of them: the spot and crypto futures trading.

Meaning Crypto futures

It is a popular financial instrument that has been used for almost 100 years. Traders use this type of trading to predict the future prices of various valuable commodities (eg gold, gas, oil). In practice, futures trading is a bet on a future asset (the price of a commodity at some point in the future).

Let’s take a look at how crypto futures are traded. Two parties enter into a derivative contract, i.e. one party bets that the price of an asset will rise, and the other party believes that the price will fall. They agree on a price and a date by which the contract must be completed. At the end of the contract, the parties must either buy or sell the asset. The buyer is the one who expected the price to fall, and the seller is the one who expected the price to go up. This is a rather difficult way to trade, as there is a significant risk of losing money if the forecast does not work and the market goes in the opposite direction.

Spot or futures?

Spot involves buying and reselling crypto assets at a market value known as the “spot rate”, i.e. the current price of crypto. With spot trading, the trader receives the asset immediately. This is the first difference between spot and cryptocurrency futures. The futures method does not mean that the asset is bought immediately. Instead, a trader buys a derivative contract and then buys (or sells) the asset itself when it expires.

The second difference is, of course, the value of the asset. Spot trading uses the current market price, while futures involve speculation or forecasts about future prices.

Analysis of spot cryptocurrencies and futures shows that spot is an easier type of trading that does not require forecasting skills or deep market knowledge.

On the WhiteBIT crypto futures platform, you can try futures trading without fear of losing your own money – just register a demo account and start practicing.

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