Crypto futures: what they are, how they work, and how to make money trading them

Cryptocurrency futures are no longer a niche financial instrument and are becoming increasingly widespread.

According to CME Group, in the first half of 2026 alone, the average daily trading volume of cryptocurrency options and crypto futures reached $8.3 billion, while open interest* exceeded $15 billion.

* Open interest (OI) is the total number of outstanding (not yet closed) contracts in the derivatives market, including cryptocurrency futures. This metric accounts for contracts with both long and short positions.

What are cryptocurrency futures?

Crypto futures are trading contracts based on the future price of a digital asset, such as Bitcoin (BTC), Ethereum (ETH), XRP (XRP), and others. One of the key features of cryptocurrency futures is the ability to trade cryptocurrencies without actually owning the underlying assets.

Just a few years ago, cryptocurrency futures were primarily available to a relatively small group of traders. Only a limited number of exchanges supported crypto futures trading.

One of the first platforms to introduce crypto futures back in 2016 was BitMEX, which has since ceased operations. Later, exchanges such as Huobi (now HTX), BTC-E Finance, and Bitfinex also added support for cryptocurrency futures.

It was not until 2021 that the first decentralized exchanges supporting crypto futures emerged, including Biswap, which operates on the BNB Smart Chain blockchain.

Following Biswap, new platforms such as dYdX and GMX emerged and attracted users by specializing specifically in cryptocurrency futures trading. For some time, these platforms were even considered alongside major decentralized exchanges such as Uniswap, Sushi, and PancakeSwap.

In 2024, a new generation of cryptocurrency futures trading platforms, Hyperliquid and Aster, emerged. These platforms took the lead and became some of the largest cryptocurrency exchanges, trailing only slightly behind the leading centralized platforms.

Thanks to the widespread adoption of cryptocurrency futures and their availability on major trading platforms, they have attracted interest not only from retail investors but also from large financial institutions, including banks, investment funds, and other institutional market participants. For example, the trading volume of Bitcoin crypto futures on CME Group (Chicago Mercantile Exchange Group) reaches $2 trillion.

How do cryptocurrency futures work?

The key difference between crypto futures and spot trading* is that traders do not purchase or own the underlying asset after executing a trade. Instead, the buyer and seller agree to execute a transaction at a predetermined price in the future.

* Spot trading is the purchase or sale of cryptocurrency at the current market price, involving the direct exchange of one asset for another. For example, when purchasing Bitcoin on the spot market, a trader pays for the cryptocurrency and receives the actual asset, which they can then hold, transfer, or sell.

For example, if an investor expects the price of Bitcoin to rise, they open a long position in crypto futures for a specified amount. If Bitcoin's price increases by the settlement date, the investor makes a profit. If the price falls, they incur a loss.

Conversely, if an investor expects Bitcoin's price to decline, they open a short position in crypto futures. If Bitcoin's price falls by the settlement date, the investor profits. If the price rises, they incur a loss.

When trading cryptocurrency futures, each contract specifies several parameters in addition to the underlying asset and contract value:

• Expiration date — determines when the contract expires, and settlement takes place between the buyer and seller (except for perpetual crypto futures).
• Margin — the amount of collateral a trader deposits when opening a trading position. Margin allows traders to increase their position size when trading cryptocurrency futures by using borrowed funds, also known as leverage*.
• Settlement method — determines how the parties fulfill their obligations under a cryptocurrency futures contract. Settlement can be cash-settled, with profits paid in fiat currency or stablecoins, or physically settled, where the buyer receives the underlying cryptocurrency specified in the contract.

* Leverage is a mechanism that allows traders to open positions larger than their own collateral (margin). For example, with 10x leverage, a trader can open a $10,000 position using $1,000 of their own funds as collateral.

Suppose a trader enters into a contract to purchase one Bitcoin at $80,000, with an expiration date two months later. If Bitcoin is worth $100,000 when the contract expires, the seller is still obligated to sell it to the buyer for $80,000. In this case, the trader earns a $20,000 profit.

However, if Bitcoin's price falls to $60,000, the trader is still obligated to purchase it for $80,000. In this scenario, the trader incurs a $20,000 loss.

What types of cryptocurrency futures are there?

1. Cash-settled futures are a type of cryptocurrency futures in which the parties settle their obligations financially on the expiration date without transferring the underlying cryptocurrency. Regulated exchanges, such as CME, commonly offer these crypto futures. Their main advantage is that traders and investors do not need to purchase, store, or transfer cryptocurrencies themselves, nor do they need to manage crypto wallets and private keys.
2. Physically settled crypto futures are contracts that involve the actual delivery of cryptocurrency upon expiration. Such cryptocurrency futures are less common on traditional exchanges because they require more complex infrastructure and the services of custodians responsible for securely storing digital assets.
3. Perpetual futures, also known as perps, are crypto futures contracts that have no fixed expiration date. They are the most widely used type of cryptocurrency futures. The price of perpetual crypto futures is kept close to the spot price through a mechanism known as the funding rate*.

* Funding rate is a mechanism involving periodic payments between traders holding long and short positions in perpetual futures, including crypto futures. When the funding rate is positive, traders holding long positions pay those holding short positions. When it is negative, the opposite occurs. This mechanism helps keep perpetual futures prices close to the cryptocurrency's current market price.

Why is cryptocurrency futures trading so popular?

The mechanics of cryptocurrency futures allow traders to profit not only when an asset's price rises but also when it falls. This creates additional opportunities to diversify risk when trading crypto assets.

Furthermore, financial instruments such as crypto futures allow traders to use leverage, or borrowed funds, to increase their position sizes and potentially generate higher profits.

However, leverage also significantly increases trading risks, potentially resulting in the complete loss of a trader's account balance in the event of liquidation. Liquidation occurs when an exchange forcibly closes a trader's position because the available collateral is no longer sufficient to maintain it.

Where can you trade cryptocurrency futures?

Crypto futures are traded on both centralized exchanges (CEXs) and decentralized exchanges (DEXs).

Cryptocurrency futures trading is available on most major centralized exchanges, including Binance, OKX, Bybit, Bitget, and Kraken.

A complete list of platforms offering crypto futures trading can be found on services such as CoinMarketCap and CoinGecko in their "Exchanges" sections.

The DeFi market also offers a wide range of platforms supporting cryptocurrency futures. The following decentralized exchanges provide crypto futures trading:

• Hyperliquid;
• Aster;
• Variational;
• Lighter;
• Grvt;
• GMX.

A more comprehensive list of decentralized platforms supporting cryptocurrency futures trading can also be found in the relevant sections of CoinMarketCap and CoinGecko.