Intro to Bitcoin Futures

What are Bitcoin Futures?

Bitcoin futures are based on the Bitcoin digital cryptocurrency. They allow you to trade your view on the price and future performance of this volatile market through a regulated exchange.

Bitcoin offers several unique benefits including a decentralized approach to finance, which means Bitcoin is not controlled by any single entity or government, allowing individuals to transfer Bitcoin without any intermediaries. Bitcoin can also offer financial stability in areas of the world where governments and banking systems are unstable. 

Capped at 21 million coins, Bitcoin is similar to precious metals in that there is a limited supply. In theory, this scarcity should allow Bitcoin to hold its value and resist devaluation over time. 

Why Trade Bitcoin Futures?

Bitcoin futures offer cryptocurrency enthusiasts a more direct way to participate in the price movement of Bitcoin by trading through a well-regulated broker like NinjaTrader. For those individuals holding actual Bitcoin, Bitcoin futures contracts can serve as a hedge in anticipation of lower Bitcoin prices. Read more about the advantages of trading Bitcoin futures over holding actual Bitcoin.

Additional benefits of trading Bitcoin futures include:

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Ability to go long or short easily on the real-time price movement of Bitcoin

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Instantaneous transactions with lower and predictable costs

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No need for a digital wallet or concerns about a potential loss from hackers

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Highly regulated with guaranteed transactions through CME Group

Trade Micro Bitcoin futures to reduce financial commitment

At 1/10th the size of one Bitcoin, Micro Bitcoin futures allow traders to access this highly active cryptocurrency market with reduced costs and low margins. Other advantages of trading these bite-sized contracts include:

  • Highly leveraged markets for more buying power
  • Start with a smaller account vs. full-size Bitcoin contract
  • Increased flexibility for better position management

Micro Bitcoin futures contracts provide an ideal entry point for new futures traders to start small and scale up as you become more comfortable in the live markets. 

Leverage also increases the risk associated with futures trading and only risk capital should be used for trading.

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Who trades Bitcoin futures?

Bitcoin futures traders can be broken down into three main groups:

  • Commercial traders in the Bitcoin futures market are typically trading to hedge their price risk on a large digital position of Bitcoin. These traders might be early Bitcoin adopters, institutional investors, or even large Bitcoin miners. 
  • Large professional traders in Bitcoin futures trade large position sizes, typically commodity trading advisors (CTAs), or commodity pool operators (CPOs) speculating on price direction.
  • Self-directed retail traders make up the remaining daily trading volume in Bitcoin futures. Like large professional traders, they speculate only on the price movement of the futures contract.

What Can Impact the Price of Bitcoin Futures?

Even though Bitcoin futures are a uniquely digital financial instrument, prices can fluctuate significantly during the trading day. They can be sensitive to a variety of factors like economic news and reports, which also affect other financial futures markets. With Bitcoin, the basic economic principles of supply and demand are in play: Are there more buyers pushing the market up or more sellers pushing it down?

Bitcoin has the potential for highly volatile price moves. Traders need to keep abreast of new technologies, the regulatory environment, and the release and success of new cryptocurrencies to gauge the overall Bitcoin trading environment.

Intramarket Factors

Bitcoin futures volume often exceeds that of all other currencies combined. There are dozens of mainstream alternative cryptocurrencies (altcoins) to Bitcoin. When these altcoins perform well in the market with higher prices, they can increase confidence in the broader cryptocurrency market, and Bitcoin prices may trend higher.

Interest Rates and Global Economic Conditions

Changes in interest rates and monetary policy or global unrest and changing economic conditions can all impact the appeal of holding Bitcoin. News stories about new cryptocurrency regulations or Bitcoin’s adoption by large institutions or governments can also sway sentiment.

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Risks of Bitcoin Futures Trading

Like every futures contract, the primary risk is that the price of Bitcoin futures will go against the trader’s position. This is especially challenging when trading Bitcoin futures as significant price moves can occur with little warning. As a result, appropriate trade sizing is paramount, as is consistently following your risk management plan, which should include a stop loss or a trailing stop. 

News and events can move Bitcoin prices significantly, and traders should always keep an eye on open positions and orders with the ability to close or adjust orders quickly.

If you are a new cryptocurrency futures trader, practicing in a futures trading simulator with live market data can help you prepare for market swings and test your strategy before trading with real money.

Micro Bitcoin Futures Contract Specifications

Micro Bitcoin futures provide an efficient, cost-effective way to fine-tune your Bitcoin exposure and meet your trading objectives. At just 1/10th the size of one Bitcoin, this reduced contract size enables traders of all account sizes to speculate or hedge the price of Bitcoin. 

You can trade Micro Bitcoin futures on the 24-hour electronic CME Globex system. Bitcoin futures contracts are cash settled at expiration.


Micro Bitcoin Futures
SymbolMBT

Exchange

CME Globex
Contract point value0.10 Bitcoin
Minimum price fluctuation$5, (0.10 * 5 = $0.50 per-contract per-minimum move)
Trading hoursSunday 6:00 pm ET to Friday 5:00 pm ET
Listed contractsMonthly contracts listed for 6 consecutive months out, quarterly contracts (Mar(H), Jun(M), Sep)U), Dec(Z)) listed for 4 additional quarters, and a second Dec(Z) contract if only one is listed
Expiration styleTrading ceases 11:00 am ET on the last Friday of the contract month
SettlementFinancially settled
Additional Specifications
View all from CME Group

Become a Bitcoin Futures Trader Today

Ready to start trading Micro Bitcoin futures? NinjaTrader is here to support you. With an award-winning trading platform and daily premium market commentary with industry pros, NinjaTrader equips you with the tools you need to embark on your futures trading journey.

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Frequently Asked Questions About How to Trade Bitcoin Futures

Bitcoin and Ethereum futures are contracts to buy or sell cryptocurrencies. They allow traders to easily speculate on price movements without needing to own the actual cryptocurrencies or maintain a digital wallet.
Bitcoin futures trading is an agreement between a buyer and seller at a specified price in a contract that will expire on a specific date. Traders can enter and exit positions any time before the expiration date in financially settled futures like the Bitcoin contract.
A Micro Bitcoin futures contract is one way to participate in crypto trading without the need for a cryptocurrency wallet.
The Bitcoin futures market offers traders direct access for speculating on the price movement of Bitcoin. Traders can easily go long or short with good liquidity virtually 24 hours a day, and with lower trading capital requirements, they have more opportunities and trading flexibility over buying and holding Bitcoin in a digital wallet.
Bitcoin futures are traded on a well-regulated exchange where orders are matched and cleared on a fair and level playing field with full price and order transparency. Traders can place buy and sell orders through their broker to enter or exit a position virtually 24 hours a day in the Bitcoin futures market.
To get started trading bitcoin futures, you will need to open an account with a futures broker like NinjaTrader, which can provide a comprehensive trading and analysis platform with real time data, extensive educational resources, and outstanding customer support.
Although the underlying technology that drives Ether and Bitcoin are different, both Micro futures contracts have similar margin and specifications and allow traders to easily trade long or short to speculate on the price of either.
Bitcoin prices can often exhibit periods of high and low price volatility, and these price swings can have a significant impact on traders. Bitcoin buyers and holders have seen prices hit as high as $32,000 and as low as $15,000 in 2023 alone, and these are not nearly the biggest price moves over Bitcoin’s history.
Bitcoin is a relatively new investment instrument. Although Bitcoin has been around since 2010, the technical analysis of seasonality for Bitcoin is still too random and unstable to be used as an effective analysis tool at this time.
Crypto futures are leveraged instruments that can see frequent wide price swings, this volatility provides opportunities for increased profits but can also increase the potential for significant losses.
A Micro Bitcoin contract allows you to control 1/10th of one Bitcoin for as little as $1,000 in day trading margin at around $2,000 if you're going to hold the position for more than one day. Traders should always hold enough trading capital in their accounts to cover price swings and losses.
Micro Bitcoin and Ether futures terminate trading on the last Friday of the contract month. These contracts are cash settled, but most traders choose to close or roll positions before the contract expires.
Yes, you can trade Bitcoin futures with NinjaTrader, an industry-leading futures broker offering low commissions, low margin rates, and the safety of your account funds. With NinjaTrader, you get all the tools and help you need to trade dozens of the most actively traded futures markets in the world including Bitcoin futures contracts.