In recent years, with the booming digital currency market, the role of digital currency exchanges has become increasingly prominent. However, the subsequent leveraged trading and contract futures trading have made these exchanges more and more like a huge casino, attracting the attention of countless investors. In this field full of challenges and opportunities, investors need to be cautious, and one mistake may lead to the loss of funds. This article will explore the leveraged contract futures mechanism behind digital currency exchanges in depth, reveal the risks and opportunities, and guide readers to make more wise investment decisions.

 The rise of digital currency exchanges

As the value of digital currencies such as Bitcoin and Ethereum continues to rise, digital currency exchanges have sprung up like mushrooms after rain. These exchanges provide investors with convenient trading channels, allowing ordinary people to participate in the digital currency market. However, with the continuous development of the market, the trading varieties of digital currency exchanges are also expanding, among which leveraged trading and contract futures have become hot trading methods.

 Leveraged trading: risks and temptations coexist

Leveraged trading is a common trading method in digital currency exchanges. It trades by borrowing funds, which can magnify investors' returns, but also increases risks. Trading digital currencies with leveraged trading is like increasing the stakes in gambling, with risks and temptations coexisting. Many investors are attracted by high leverage multiples, but once the market fluctuates violently, it may lead to huge losses of funds.

 Contract futures: gambling on market predictions

Contract futures trading is another trading method that has attracted much attention in digital currency exchanges. Investors can use contract futures to make market predictions and gain profits. However, the volatility of the contract futures market is large, and investors need to have strong market insight and risk control capabilities. Similar to the bet on size in a casino, contract futures trading is also a high-risk and high-return game.

 Risk warning: traps in digital currency exchanges

Although digital currency exchanges provide investors with a wide variety of trading options, there are many risks hidden in them. The high-risk characteristics of leveraged trading and contract futures trading require investors to remain vigilant and cautious. In this tempting digital currency exchange, investors need to always be vigilant to the existence of traps, make rational decisions, and avoid over-investment.

 Investment advice: wise choices and rational trading

Faced with the current situation that digital currency exchanges are becoming more and more like casinos, investors should remain rational and avoid blindly following the trend. When choosing leveraged trading and contract futures trading, you should do what you can and make choices based on your own risk tolerance and investment experience. At the same time, it is recommended that investors conduct sufficient market research and risk assessment before trading, formulate reasonable trading strategies, and distinguish between investment and speculation.

 Conclusion

The development of digital currency exchanges is booming, but the risks involved cannot be ignored. The rise of leveraged trading and contract futures trading makes digital currency exchanges more like a huge casino. Investors need to be vigilant and invest rationally. In this field full of challenges and opportunities, only by being cautious can you win in the magnificent digital currency market. I hope that every investor in this digital currency world will seize opportunities, stay away from risks, and achieve the goal of wealth appreciation.

The four most famous international exchanges:

Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
China Line　APP DL	China Line　APP DL	China Line　APP DL	China Line　APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.

In the past, margin trading business only existed in some digital asset exchanges, such as Kraken, Huobi, etc., which have both spot and margin trading business, and BitMex, CME, etc., which only provide related margin trading.

However, with the development of the market, exchanges that used to only provide spot business have gradually put margin business on the agenda, and margin trading may be becoming the "standard" of mainstream exchanges.

Cryptocurrency derivatives trading volume surges

As the cryptocurrency market heats up, the margin trading volume of cryptocurrencies is constantly expanding. On May 12, 2019, itMEX Exchange CEO Arthur
Hayes announced on Twitter that the exchange's 24-hour trading volume exceeded US$10 billion, setting a record high.

On June 28, the Chicago Mercantile Exchange (CME) also tweeted that the trading volume of CME Bitcoin futures hit a new high of $1.7 billion. On June 26, the single-day Bitcoin futures trading volume reached $1.7 billion. CME's trading has set a record high for two consecutive months, up 30% from the previous trading volume peak.

(△ Picture: CME Group Twitter)

The above two cases show that the trading volume of the spot market has reached a record level this year, and the attractiveness of cryptocurrency margin trading has also increased accordingly.

What is margin trading?

In layman's terms, in the crypto market, margin trading refers to the transaction behavior of "buying long" or "selling short" by pledging a certain margin to the service provider.

Common margin trading currently includes leveraged trading and contract trading.

Contract trading may be becoming a standard feature of crypto exchanges

As the market trading volume grows, some exchanges that originally only provided spot business have gradually put margin business on the agenda, such as Coinbase.

At the Asian Blockchain Summit 2019 held in Taipei on July 2, Zhao Changpeng, CEO of Binance, the world's largest crypto-to-crypto exchange, announced that it would launch a futures trading platform called Futures in the coming months.

Zhao Changpeng said that BTC/USDT futures will be supported initially with a leverage ratio of up to 20 times, but it is expected that the platform will eventually support more futures trading pairs and higher leverage ratios.

(△ Image: Binance Weibo)

Earlier this year, Binance Twitter hinted that margin trading products were under development, and the button for margin trading function has appeared in the newly launched beta trading website, verifying this hint.

In May, Binance released news about spot leverage trading, followed by the launch of grayscale testing of spot leverage.

The essence of Binance's spot leverage is basically the same as the logic behind the stock market's allocation system. That is, using a small amount of funds as margin to leverage a huge amount of funds, thereby maximizing profits when the market is in an upward phase.

After the release of Binance leveraged trading information, Emilie Choi, Coinbase's vice president of business, data and international business, also said that "margin trading will undoubtedly be our next big plan, especially for active traders", suggesting Coinbase's layout in margin trading.

Compared with Binance, Coinbase is more concerned about US regulation. Discussions around exchange regulation may have hindered Coinbase's product planning.

With the addition of original cryptocurrency spot exchanges such as Coinbase and Binance, investors can get more trading options.

But while seeing the increase in trading volume, investors should also realize that the margin market is riskier than the ordinary trading market, so it is not recommended for ordinary people with low risk tolerance to enter.

Crypto futures contracts that embrace regulation

The unavoidable regulatory policy seems to have opened its arms to the crypto market this year. Since the beginning of this year, several Bitcoin futures exchanges have been queuing up for license approval from the US Commodity Futures Trading Commission (CFTC).

On June 25, the CFTC approved Bitcoin derivatives supplier LedgerX to provide physically settled Bitcoin futures contracts. This means that LedgerX can now offer new futures contracts, and not only can LedgerX list these Bitcoin futures contracts, but it can also offer trading products to mass investors outside of institutions.

On July 2, ErisX announced that the CFTC granted it a derivatives clearing organization (DCO) license as a secondary approval on top of the existing designated contract market (DCM) license the exchange already holds. These approvals mean that ErisX can now launch crypto futures products with the support of US regulators. ErisX said it will launch its futures contracts "later this year." These contracts will be physically settled, meaning that customers will receive real Bitcoin instead of the equivalent in cash.

Waiting in line for license approval is Bakkt, a BTC futures trading platform developed by ICE, the parent company of the New York Stock Exchange. The exchange plans to conduct user testing of BTC futures on July 22. It is also a futures contract transaction with physical settlement of Bitcoin.

The entry and regulation of regulators will also be conducive to the further compliance and healthy development of the crypto market, and the contract market will further expand the trading volume of the crypto market. Crypto exchanges are expanding into margin trading, and traditional exchanges are also moving towards crypto compliant contract trading. Taken together, these two factors may be making great strides towards becoming "casinos."