What Is a Futures Contract?
A futures contract is a binding agreement between two parties to buy or sell an asset at a specific price on a future date. In crypto, futures allow traders to speculate on price movements with leverage without owning the underlying asset, and enable hedging against price risk.
How Futures Work
Quarterly futures expire on set dates (e.g., March, June, September, December). At expiry, positions are settled — either physically (asset delivery) or cash-settled (profit/loss paid in stablecoins).
Perpetual futures have no expiry and use funding rates to stay anchored to spot price. They are by far the most traded crypto derivatives product.
Futures require posting margin (collateral) and allow leverage, meaning you control more notional value than your capital. 10x leverage means $1,000 in margin controls a $10,000 position.
Why It Matters for Traders
Futures provide leverage, short-selling capability, and hedging tools that spot markets lack. They also generate valuable data — open interest, liquidation levels, funding rates, and basis — that give insight into market positioning and potential price moves.