What is leverage/futures trading in Crypto?

Futures, or futures contracts, are an agreement to buy or sell an asset at a later date for a fixed price. They are typically used by traders as a way to hedge other investments or to lock in profits when trading in volatile markets. The prices for Kraken’s futures are based on aggregated indices that represent the demand for each cryptocurrency from a variety of exchanges, so pricing is always clear and transparent. There are a number of benefits to this type of trading:

Hedge Price Risk

Investors who are holding digital assets can mitigate the risk of a falling price by simultaneously taking a “short” future position on the asset in question. If the price falls, the “short” position will mitigate losses by providing additional revenue.

Speculate on Market Direction

Cryptocurrency futures trading brings with it the opportunity for real speculation to occur – traders can make their opinions felt in the market with futures positions. Think the price of Bitcoin is going to the moon? Get extra long on futures and multiply your returns. Think LTC is going to die? Put your money where your mouth is and get short on Litecoin Futures!

Stabilize Price Fluctuations

With speculation comes stability as long term views of the markets play a more significant role. Whether you are a miner with expected Bitcoin flows or a Bitcoin ATM operator with inventory to manage: futures help crypto merchants smoothen their exposure while being able to focus on their core business.

Trade Regulated Crypto Futures Products

Kraken Futures allows access to regulated futures products. We are dedicated to providing a dependable and diverse solution for cryptocurrency futures trading around the world.

Leverage up to 50x with crypto futures

Futures are extremely capital efficient, meaning that less money is required to open positions than if you were spot trading (1x) or margin trading (3-5x). This means if you have 10 Bitcoin and are scared of price decline, you have to trust 100% of your money to spot exchange to sell, or 20% of your money on margin exchange. With 50x futures, you trust as low as 2% of your money on exchange.

Using collateral as low as 2% of the notional amount, crypto futures allow you to take positions with up to 50x leverage — giving you flexibility to position yourself in the market while maintaining low exchange risk.