Crypto futures are derivative financial instruments that allow you to speculate on future prices of cryptocurrencies. Trading them allows you to earn not only on the growth of the cryptocurrency value, but also on its fall.
How to make money on crypto futures?
1. Long and short:
⬆️A long is a bet that the price of a cryptocurrency will go up. You buy a futures contract expecting its price to go up and sell it later, making money on the difference.
⬇️Short is a bet that the price will fall. You enter into a futures contract to sell at the current price, and if the price actually falls, you buy the asset back at a lower price, locking in your profit.
🤼2. Leverage:
Like traditional futures, crypto futures can be leveraged. This means you can manage large positions with a small portion of your funds. For example, if you have 1 Bitcoin, with 10x leverage you can open positions worth 10 Bitcoin. However, this increases both your profits and potential losses.
🤷Where to get information for analysis?
To predict profit, it is necessary to analyze many factors:
1. Technical analysis:
Study of cryptocurrency charts and historical prices. Main indicators: trends, support and resistance levels, relative strength indexes (RSI), moving averages.
Popular tools for analysis: TradingView, Coinigy.
2. Fundamental analysis:
Evaluate real factors that influence the price of cryptocurrency, such as news about new partnerships, blockchain updates, regulations, changes in supply and demand.
Follow news on platforms like CoinDesk, CoinTelegraph, or via Twitter and Reddit, where events that could impact the price are often discussed.
3. Sentiment analysis (market sentiment):
It is important to understand that the cryptocurrency market is highly dependent on traders’ sentiment. Monitoring social media, forums (e.g. Reddit, Twitter) and market sentiment indices can help to understand the general sentiment in the market.
For example, the Crypto Fear & Greed Index shows whether the market is in a state of fear or greed, which can provide clues about possible price movements.
4. Volume analysis:
Monitor trading volumes. A sharp spike in volumes can indicate potential price movement.
5. News and macroeconomics:
Geopolitical events, regulatory decisions, changes in legislation — all of this can affect cryptocurrency prices. Regularly check news portals such as Bloomberg or specialized resources.
6. On-chain analysis:
This type of analysis examines blockchain data such as the number of active addresses, transaction volumes, the number of coins on exchanges, etc. The data can be accessed through services such as Glassnode and CryptoQuant.
Example:
Imagine that the price of Bitcoin is currently $30,000 and you think it will go up in a week. You buy a futures contract for 1 Bitcoin using 10x leverage (you invest only 10% of the contract value - $3,000). If the price of Bitcoin rises to $35,000, you can sell the contract and make money on the difference ($5,000). But if the price falls, say, to $25,000, your losses may exceed your initial deposit, which will lead to liquidation of the position.
Main risks:
Volatility: Cryptocurrencies can fluctuate wildly in price, increasing both the potential for gain and the risk of loss.
Leverage: While it allows you to trade larger amounts, it also increases losses, which can lead to your deposit being wiped out completely.
Regulation: Cryptocurrencies are still subject to changes in legislation, which can lead to unpredictable consequences for the price.
It is better to start with small amounts, gradually increasing positions as soon as you begin to feel confident in market analysis.
