Why Crypto Futures Are Better Than Traditional Derivatives

UTC by Andy Watson · 5 min read
Why Crypto Futures Are Better Than Traditional Derivatives
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The crypto futures market allows traders to make movements 24 hours a day 7 days a week.

Futures are a popular way to invest in different commodities. Futures are a type of derivative that allows investors to bet on the future price of commodities like gold, crude oil, corn, and more. And in recent years, this mechanism has also become a popular way to invest in cryptocurrencies.

The reason for that is simple: cryptocurrencies are commodities, and as such, crypto future markets offer investors all the same benefits that make traditional future markets appealing. With some additional benefits that help make crypto futures more appealing than the alternatives.

Advantages of Trading Futures

Put simply, futures are a type of financial contract where two parties agree to buy and sell a given commodity for a specific price on a predetermined date. In essence, this works as if both parts of the contract are taking a bet – one investor is betting that the price will go up, the other that the price will go down, and whoever gets it wrong will need to cover the difference.

There are many advantages to choosing futures over buying a commodity outright. One of them is that futures allow for trades and speculation to happen without the need to hold the actual asset.

In the commodity market, this means that you can trade futures on containers full of corn without needing to own or store those containers. And in the crypto market, futures allow traders to make moves without the need to set up a coin wallet or worry about keeping their crypto assets secure.

Another advantage of futures is that it allows traders to use leverage to make bigger investments. Leverage allows traders to invest more than what they currently have in their accounts. This holds in both the traditional market and the crypto market, where exchanges like BTCC allow users to trade crypto futures with up to 150x leverage.

Why Crypto Futures are Better


One of the main advantages of crypto futures is how easy they are to access. The traditional futures market is heavily regulated – they don’t allow just anyone to start trading futures. Thanks to the risks involved, retail investors need to go through several layers of red tape and deal with various institutions before being allowed to hold a future position, a process that can take weeks or even months.

In the crypto market, however, buying and selling futures is usually as easy as finding an exchange and creating an account. Not all futures offer future trading options, and it’s important to choose carefully if you want to get the best trading terms.

The need for due diligence makes this process a little less expedient. You can’t just start trading on any random exchange, you need to make sure they’re reputable, licensed, and have sufficient security measures in place. It’s good to check if the exchange has a history of liquidity issues, as those can make it impossible to trade or withdraw your funds.

Still, even when considering the time needed for due diligence, you can still start trading futures within a week.

Great for Training

Trading crypto futures isn’t just easier than trading traditional futures. It’s also often easier than trading actual crypto. Combine that with the fact that most future crypto exchanges offer tools to help investors limit their losses, and it’s easy to see why crypto futures are becoming a popular way for beginners to get a taste of the market.

Crypto futures are also a great way to learn more about futures in general. If you’re looking to trade gold, oil, coal, and other commodities at some point, starting with crypto is an easy way to learn more about this type of derivative.

24/7 Access

The crypto futures market also allows traders to make movements 24 hours a day 7 days a week. Traditional future exchanges operate following business hours, meaning that if something causes a commodity price to plummet while the exchange is closed, you won’t be able to do anything about it until the exchange opens again.

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Another factor to consider is how digital-oriented crypto exchanges are. While you may need to call someone during business hours to change your future position in the traditional market, monitoring and altering your crypto futures is just a matter of opening your exchange’s app.

More Options

While the crypto future market is regulated by the Commodity Futures Trading Commission, this market needs to follow much less strict regulations. This allows for a greater number of future investment options to be made available. A good example of this is perpetual futures, which is a type of derivative you can’t get in the traditional commodity market. Another example are tokenized futures, which can be traded as stocks and commodities with USDT, all without the need to hold any crypto yourself.

Different exchanges will have different options and different terms. This is one of the benefits that come from crypto futures being less regulated – it allows for a greater level of creativity in the market, as well as more fierce competition between exchanges looking to win over traders.

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