In today's digital currency market, Bitcoin has always been a hot topic of concern. Bitcoin can be traded in a variety of forms, among which futures and spot trading are two common ways. This article will delve into the difference between Bitcoin futures and spot trading to reveal the secrets of investment for you.

Bitcoin futures and spot trading are fundamentally different. Bitcoin spot trading refers to investors directly purchasing actual Bitcoin assets and obtaining investment returns by holding these digital currencies. Bitcoin futures trading, on the other hand, is the purchase or sale of a certain amount of Bitcoin at an agreed price on a future agreed date. Futures trading allows investors to profit in both rising and falling prices, while also increasing market liquidity.

In actual operations, Bitcoin futures trading focuses more on speculation and hedging risks, while Bitcoin spot trading is more inclined to long-term investment and holding. The leverage effect of futures trading allows investors to control a larger value of Bitcoin positions with less funds, thereby obtaining higher returns on investment. However, futures trading is also accompanied by higher risks, and price fluctuations may cause investors to lose money or even blow up their positions.

Let's take an example to illustrate this difference. Xiao Ming bought a certain amount of Bitcoin in Bitcoin spot trading and decided to hold it for a long time. He believes that the value of Bitcoin will increase over time, so he chose spot trading as a long-term investment method. In contrast, Xiaohong prefers to trade Bitcoin futures. She uses the leverage effect to obtain higher returns in the short term, but she must also bear greater risks.

In addition to the difference in investment strategy, Bitcoin futures and spot trading also differ in trading mechanisms, settlement methods, etc. Bitcoin futures trading is usually conducted on exchanges, which provide leverage, margin and other services, while spot trading can be conducted through digital currency trading platforms, which is more flexible. In addition, the settlement method for futures trading is cash settlement according to the price specified in the contract, while spot trading is the actual delivery of Bitcoin.

When choosing an investment method, investors need to make choices based on their own risk preferences, investment goals and market expectations. Whether choosing Bitcoin futures or spot trading, you need to carefully assess the risks and formulate a reasonable stop-loss strategy to avoid huge losses due to price fluctuations.

In summary, Bitcoin futures and spot trading have their own advantages and disadvantages, and investors should choose a suitable trading method according to their own situation. No matter which method you choose, you need to be cautious and invest rationally to obtain stable returns in the digital currency market. I hope the analysis in this article can provide you with some inspiration and reference for your Bitcoin investment. I wish you a smooth investment!

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.

Bitcoin futures and spot? Bitcoin futures are used to speculate on the price changes of Bitcoin, and investors who participate do not need to actually hold Bitcoin. Bitcoin spot is a trading method in which Bitcoin is purchased at the real-time market transaction price and immediately credited to the account. After understanding Bitcoin futures and spot, let's return to the topic. What is the difference between Bitcoin futures and spot? Below, the editor of the currency circle will give you an in-depth analysis of the difference between Bitcoin futures and spot.

 In-depth analysis of the difference between Bitcoin futures and spot?

1. Different attributes

Bitcoin spot trading, generally speaking, when newcomers in the currency circle buy and sell digital currencies, the first transaction is almost always in progress. Generally, USDT is exchanged, the currency to be purchased is selected, such as Bitcoin, and then purchased at the "market price" or "limit price". After buying, the Bitcoin will be credited in about a few seconds. This method is to buy Bitcoin at the real-time market transaction price and immediately credited to the account. This trading method is called "spot trading", which simply means buying and selling on the spot with one hand for money and one hand for delivery.

Futures are the opposite of spot. Spot is a commodity that can be delivered in exchange for money. Futures are not "goods". They are agreements (contracts) that promise to deliver "goods" (subject matter) at a certain time in the future - futures contracts. Bitcoin futures are usually standardized contracts with Bitcoin price index (such as the BraveNewCoin Global Bitcoin/USD Price Index adopted by 796 Exchange) as the subject matter. The Bitcoin futures provided are usually traded in Bitcoin.

2. Different margin ratios

The margin ratio in the futures market is around 5%-10%. The margin ratio is low and the leverage is large, which also amplifies the risks and benefits of investment. The margin in the spot market is usually around 20%. Special circumstances (continuous price limits, near delivery, etc.) will increase the margin, with moderate leverage and moderate risk.

3. Different trading hours

Bitcoin spot generally has 724 hours trading, while Bitcoin futures have fixed trading hours.

4. Different price limits

Bitcoin futures have price limits, but Bitcoin spot does not.

5. Trading Objects

The objects of Bitcoin spot trading are mainly physical commodities, while the objects of Bitcoin futures trading are standardized contracts. In this sense, futures are not goods, but contracts about certain commodities.

6. Trading Purpose

The purpose of Bitcoin spot trading is to obtain or transfer the ownership of Bitcoin, which is a direct means to meet the needs of both buyers and sellers.

The purpose of Bitcoin futures trading is generally not to obtain physical Bitcoin. The purpose of hedgers is to transfer the price risk of the spot market through Bitcoin futures trading, and the purpose of speculators is to obtain risk profits from price fluctuations in the futures market.

7. Settlement Method

Bitcoin spot trading mainly adopts the settlement method of one-time settlement upon maturity, and there are also cash on delivery methods and installment payment methods in credit transactions.

Bitcoin futures trading implements a same-day non-liability settlement system. Both parties to the transaction must pay a certain amount of margin and always maintain a certain margin level during the transaction.

 Reasons for fluctuations between spot and futures prices:

When selling through the spot market, the order will be settled immediately. By choosing to sell a future contract, the seller will postpone this settlement, sometimes asking for more (or less) money depending on market conditions.

But there is a catch. To prevent market manipulation, margin calculations do not take into account the trading price of the contract. Derivatives exchanges often create indices, also known as "fair prices," which are calculated from the average price of spot exchanges.

By doing this, exchanges offering futures contracts reduce the incentive for anyone to try to manipulate their prices. The underlying fair price of the asset will be used to determine whether the position has used too much margin and should therefore be forced to close.

 How to use Bitcoin futures and spot hedging?

Let's take an example to illustrate. For ease of understanding, we take the integers of futures and spot prices. Suppose the current Bitcoin price is $10,000 and the Bitcoin perpetual contract price on the JEX platform is $11,000. Then we can buy 1 Bitcoin at $10,000 on Huobi and short the same value of futures on JEX, which is $10,000.

There are 3 situations here:

1. If the spread between futures and spot prices narrows, profits have been realized, and futures and spot positions can be closed separately.

2. If the spread between futures and spot prices widens, the floating profit and loss of futures will be negative, and you can wait for the futures to expire and be delivered. The futures delivery price is calculated based on the spot price, so the delivery price is basically the same as the spot price, and the profit is about
11000 - 10000 = 100 US dollars. JEX uses the funding rate to anchor the spot price every 8 hours, which is more flexible than the delivery contract.

3. If the spot price is higher than the futures price, the total profit will exceed 100 US dollars.

The above is the way to make money by arbitrage between Bitcoin futures and spot.

For investors, whether it is Bitcoin futures trading or Bitcoin spot trading, they need to choose a Bitcoin exchange. Whether a Bitcoin exchange is worth choosing depends mainly on whether the trading platform is reliable. A reliable exchange should at least provide investors with several security supports, such as two-factor login authentication; PGP encrypted email communication; email or SMS reminders.