Why should I trade Futures?
Trading Futures can be advantageous in a number of ways compared to trading the underlying asset directly: Futures allow benefiting from price increases as well as declines, provide financial leverage, can be used to hedge price risk and are associated with low transaction fees.
What instruments do you list?
We currently list:
- Inverse futures on the US Dollar price of four digital assets: BTC, ETH, XRP, and LTC. See inverse futures contract specifications.
- Linear futures on the US Dollar price of over 35 digital assets. See linear futures contract specifications.
Futures come in two main types:
- Perpetual contracts which have no expiry/settlement and instead auto-roll every hour with a funding rate mechanism paid between Long and Short positions to anchor the price to the spot rate
- Fixed Maturity contracts with up to Weekly, Monthly, Quarterly, and Semiannual maturity schedule, depending on the underlying asset. These carry an tag for easier reference: Week, Month, Quarter, and Semiannual.
Linear fixed maturities expire at 8 UTC every Friday.
Inverse fixed maturities expire at 16 London time every last Friday of the month
What do inverse and linear mean?
Inverse futures means that the payoff structure for your position is non-linear. The PnL is calculated so that the profit on the collateral you use matches the denomination of the contract as price adjusts.
For example, in Bitcoin-Dollar, because you are using Bitcoin as collateral and the contract is denominated in USD, as the price falls, the payout in bitcoin has to be higher to match the Dollar value. This means that if the Bitcoin-Dollar price goes up 10% your payoff is 9.9% and if it goes down 10% your BTC payoff is 11.1%.
Linear futures mean that the payoff structure for your position is linear. The PnL is calculated based on the position size and the price of the futures.
For example, in Bitcoin-Dollar, you use USD as the collateral and the contract is denominated in the underlying size. This means that if the Bitcoin-Dollar price goes up 10% your payoff will be 10% and likewise if it goes down 10% the payoff is 10%.
What does a typical trade look like?
Example Inverse Futures:
You think that the price of bitcoin will increase against USD and buy 100,000 Bitcoin-Dollar Futures at 75,000 USD per bitcoin. Every Inverse Futures has a contract size of 1 USD. The price of bitcoin actually increases and you are able to sell the Futures at 76,000. Your PnL is calculated as:
( 1 / Entry Price - 1 / Exit Price ) * Position Size = (1 / 75,000 - 1 / 76,000) * 100,000 = 0.017544 bitcoin
Example Linear Futures:
You think that the price of Ether will increase against Dollar and buy 100 Ether-Dollar Futures at 1500 USD per Ether. The price of Ether actually increases and you are able to sell the Futures at 1600. Your PnL is calculated as:
( Exit price - Entry price ) * Position Size = (1600 - 1500) * 100 = 10000 USD
What happens if I hold a position until maturity?
Your position will be cash settled at a rate representing the underlying spot market.
Do you have a "socialised loss" system, "claw-backs" or something similar?
No. If you buy, we match you with a seller, and if you sell, we match you with a buyer. If you make a profit, this profit will come from other traders' losses on the platform. As a neutral exchange, we manage the margin of counterparties in real-time and transfer any profit and loss. If a liquidation can not be filled, it goes through an orderly equity protection process that attempts to first assign it to a marketmaker and then unwind the remainder of the position to avoid system losses as last resort. Thus, the risk management system is designed to not sustain losses that would require schemes like "claw-back".
Why do Futures prices differ from the spot prices?
In mature financial markets, this price difference is determined by technical factors such as interest rate differentials, dividends or storage costs. In the case of bitcoin and other digital assets, the price difference is mostly driven by supply and demand imbalances.
Who is my counterparty?
If you offer to trade an instrument on the platform, this offer is matched by the trading system with another trader's offer to take the other side of that trade. This means that Crypto Facilities does not act as trade counterparty.
Crypto Facilities has discretion over whether any offer to buy or sell is successfully accepted, matched or executed and we may choose at our discretion to refuse an order and such refusal is notified to you. This is to ensure that trades do not lead to market manipulation or other unfair circumstances.
Can I exit a position before maturity?
Open positions can be exited before maturity by submitting a buy or sell order that closes the position (i.e. if you have a long position you sell, if you have a short position you buy back). The party with which you do the exit trade will then take over your obligations vis-à-vis your original counterparty.
* XBTUSD is used for logs download and API only