Home » The Difference between the Crypto Futures Market and Spot

The Difference between the Crypto Futures Market and Spot

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

  • Stake
  • Spot 
  • Margin
  • Futures
  • Leverage.

On the WhiteBIT platform, you can practice all of these financial instruments. Let’s look at two of them: spot and crypto futures trading.

The Meaning of 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 (e.g. gold, gas, oil). In practice, futures trading is a bet on a future asset (the price of a commodity at a certain point in the future).

Let’s see how crypto futures are traded. Two parties enter into a derivative contract, i.e. one party bets that the price of the asset will go up, and the other party believes that the price will go down. They agree on a price and a date by which the contract must be fulfilled. When the contract expires, the parties must either buy or sell the asset. The buyer is the one who expected the price to go down, and the seller is the one who expected the price to go up. This is a rather complex way of trading, as there is a significant risk of losing money if the prediction fails and the market moves in the opposite direction.

Spot or Futures?

Spot involves purchasing and reselling crypto assets at market values, known as the “spot rate”, i.e. the present price of crypto. When trading spot, a trader receives the asset immediately. That is the first distinction between spot andcrypto futures. The futures method does not mean that the asset is purchased immediately. Instead, the trader buys the derivative contract and then buys (or sells) the asset itself when it expires.

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

An analysis of spot cryptocurrencies and futures shows that spot is a simpler type of trading that does not require forecasting skills or in-depth market knowledge.

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