How to Trade Bitcoin Futures in 2025

Bitcoin has come a long way from being a niche digital currency to becoming the largest cryptocurrency and one of the most traded digital assets in the world. However, trading BTC itself can be risky, and this is where Bitcoin futures come into play.

Bitcoin futures trading lets traders speculate on Bitcoin’s price movement without owning the asset. With this type of trading, investors can hedge against the fluctuating nature of Bitcoin prices and amplify their winnings through leverage.

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What are Bitcoin futures?

Bitcoin futures are financial contracts between two traders, enabling them to speculate the price of Bitcoin without necessarily owning the asset. These agreements require the parties to purchase or sell BTC at a predetermined price on a specified date in the future.

Bitcoin futures are traded on regulated platforms and crypto exchanges such as the Chicago Mercantile Exchange (CME), offering a structured trading environment for investors. Futures act as hedging tools against price volatility and allow for leveraging positions, amplifying potential profits as well as losses.

By trading Bitcoin futures, investors can participate in the crypto market’s movement without owning the cryptocurrency, which allows them to mitigate certain risks associated with the direct ownership of Bitcoin.

Crypto futures key terminology

Before exploring Bitcoin futures further, let’s first understand the key terms that govern how these contracts work.

Term	Definition
Futures contract	A standardized agreement to buy or sell Bitcoin at a set price on a future date.
Leverage	Borrowing funds to increase the size of a trade, potentially amplifying profits or losses.
Margin	The amount of capital required to open and maintain a leveraged position.
Expiration date	The date when a futures contract is settled or closed.
Settlement	The process of finalizing a futures contract, either by cash settlement or physical delivery.
Going long	Buying a futures contract in anticipation of Bitcoin’s price increasing.
Going short	Selling a futures contract to profit from Bitcoin’s price decreasing.
Mark price	The fair market price of a futures contract calculated to prevent manipulation.
Liquidation	When a trader’s margin balance drops too low, forcing the exchange to close its position.

How to trade Bitcoin Futures

Trading Bitcoin futures can seem complicated at first. However, breaking it down into steps makes the process simpler to understand. Whether you’re a seasoned trader or a novice, it is essential to follow a structured guide.

Choose a reputable exchange

Before embarking on futures trading, you must identify a platform that offers Bitcoin futures. Vetting the platform before using it is important because different platforms have varying levels of security, leverage, fees, and liquidity.

Although most of the best exchanges that offer a secure and compliant trading environment may require higher capital to participate, they are worth the cost in the long run. Choose regulated platforms such as the Chicago Mercantile Exchange (CME).

It is also important to work with platforms that offer flexible trading options, high leverage, and lower entry barriers. Such platforms include Binance, Bybit, and Kraken.

Check platform security, trading fees, and withdrawal limits before committing to a platform.
Open and fund your trading account

Once you have settled for an exchange platform and are ready to start trading futures, register an account and complete all the necessary steps, including verification. Most platforms require a government-issued identification document verification to comply with regulations. The next step is to deposit funds into your account via crypto or bank transfer.
Select your futures contract

Future contracts feature different expiration dates and margins. When choosing a contract, consider:

Size of the contract: If you are a beginner and want to start small, choose exchanges that offer micro Bitcoin futures for smaller traders.

Leverage: Higher leverage translates to higher gains if you win and larger losses if the contract goes against your bet.

Expiration: Short-term traders may select perpetual futures, which don’t expire, while long-term investors may prefer quarterly or monthly contracts.
Place your first trade – go long or short

Now that your account is verified and funded, it’s time to place your first contract. There are two primary positions in futures trading: going long or short. Going long, also buying a futures contract, is applicable when you expect the price of Bitcoin to go up, while going short, also selling a futures contract, is when you expect the price to drop.
Monitor and manage your trade

Futures trading requires close monitoring because prices can shift quickly. Most exchanges have tools you can use to manage risk.
Stop-loss orders automatically close your trade if the price reaches a certain level.
Take-profit orders lock in profits by selling at a pre-set price.
Margin calls apply when your balance drops below the required margin, allowing the platform to liquidate your position.

The pros and cons of trading BTC futures

Like any trading asset, trading Bitcoin futures comes with advantages and disadvantages.

Pros

Leverage allows larger trading positions, allowing traders to control a big position with a small investment.
With futures trading, traders can gain whether Bitcoin’s price drops or rises. This is because traders do not have to own the asset.
Since futures are derivatives, you don’t need to hold Bitcoin to participate in the trade.
Major exchanges like Binance and CME offer deep liquidity and fair pricing.

Cons:

Futures trading carries high risks due to leverage. While leverage can multiply into significant profits, it can also lead to great losses if the bet does not shift in the trader’s favor.
Bitcoin futures carry liquidation risk, i.e., if the market shifts against your position and your account does not have enough funds, your trade can be closed automatically.
Some exchanges charge holding fees and funding costs, resulting in reduced profits.
Sudden price swings or liquidation wicks can trigger margin calls and stop losses. This is primarily referred to as market manipulation.

Where to trade Bitcoin futures

Choosing the proper exchange is the first and the most essential step when getting into Bitcoin futures trading. Every platform offers varying terms regarding leverage, fees, security, and liquidity.

Binance

Binance is among the largest and best crypto exchanges globally. The platform offers comprehensive futures trading with up to 125x leverage. Binance provides advanced trading tools, deep liquidity, and multiple types of contracts, making it a top choice for both seasoned and novice traders.

Coinbase

Coinbase is a highly regulated crypto exchange known for its high security and intuitive user interface. While it’s a little limited on futures trading compared to Binance, it’s the perfect platform for traders looking for a secure, trusted, and compliant trading environment.

Kraken

Kraken is a crypto exchange known for its high security and transparency. The platform offers leverage up to 50x and a selection of futures trading contracts. Kraken is the perfect place for traders looking for security and stability.

ByBit

ByBit is one of the fastest-growing platforms in the world. The platform specializes in derivatives trading and perpetual contracts. ByBit offers up to 100x leverage and a user-friendly interface. ByBit is the perfect environment for users looking for high-speed execution and flexibility.

Regulated exchanges for Bitcoin futures

CME Group is the largest regulated futures exchange used primarily by institutional investors.
Bakkt offers physical and settled Bitcoin futures.
LedgerX is a regulated United States exchange offering Bitcoin options and futures.

Is Bitcoin Futures trading profitable?

Bitcoin futures trading can be a lucrative venture, but it is vital to understand the risks involved and market dynamics. Unlike spot trading, where you own the crypto asset, Bitcoin futures allow traders to speculate on the asset’s price movements without holding the underlying asset.

Bitcoin futures trading is a potentially lucrative investment, especially for traders adept at navigating volatile markets. However, it is essential to be cautious, utilize sound risk management strategies, and trade with capital you can afford to lose.

Are Bitcoin futures safe?

BTC futures trading is safe as long as it is conducted on a regulated platform like Binance, Coinbase, Kraken, or ByBit. These exchanges have strict security features, including two-step authentication and cold storage of traders’ funds to protect their assets.

The inherent risks of BTC futures trading come from leverage and market volatility. While high leverage can amplify profits significantly, it can also result in massive losses if the market shifts against your position. To minimize risks, you should use stop-loss orders and stop overleveraging. Diversification of the assets is also another means of avoiding the losses involved in BTC futures trading.

How are Bitcoin futures taxed?

Bitcoin futures are taxed depending on jurisdiction. Most countries tax profits from Bitcoin futures trading as capital gains. If you hold a position for less than a year, your earnings may be classified as short-term capital gains, which are subject to higher taxation than long-term capital gains.

In some countries, regular traders are classified as professional traders. As such, their earnings are taxed as income.

What is the difference between crypto options and crypto futures?

Crypto options and crypto futures are both derivative instruments that allow you to predict future price movements of cryptocurrencies. However, the two differ in structure, risk, and strategic application.

Crypto futures

A crypto futures contract is a binding agreement to buy or sell a given amount of crypto asset at a set price on a predetermined future date. Key characteristics of futures trading include:

Obligation: Both traders in a futures contract have a responsibility to execute the contract when it expires, regardless of the current market price.
Leverage: Futures contracts often allow trading on margin, which enables traders to open larger positions with small capital.
Risk profile: The obligatory nature of futures trading means potential for significant profits or losses, as traders are committed to the terms of the contract.

Crypto options

A crypto option provides the holder the right but not the obligation to buy or sell a specific amount of cryptocurrency at a predetermined price before or on a predetermined expiry date. Buying is called a call option, while selling is a put option.

Key characteristics of crypto options include:

Choice: The holder exercises the option based on market conditions, limiting potential losses.
Premium payment: To acquire an option, a trader must pay a premium upfront, which is the maximum potential loss if the option is not executed.
Strategic flexibility: Crypto options can be used for various strategies, including hedging and prediction, with controlled exposure to risks.

Key Differences

Obligation vs. choice: Crypto futures contracts bind both traders to the transaction at the expiration date, while options give holders the right but the obligation to exercise the option.
Risk and reward: Futures can result in significant profits or losses for both parties due to the binding nature of the contract. Options curb potential losses to the premium paid, providing a more controlled risk environment.
Cost structure: Entering a futures contract does not require an upfront premium payment, whereas options require a premium upfront.

Conclusion

Bitcoin futures trading offers opportunities for profits and risk management. However, it is crucial to understand the dynamics of the market and approach it with a well-defined risk management strategy. Always stay updated and seek assistance from a financial professional before embarking on futures trading.