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Purpose of Bitcoin Futures: Speculation: Traders use Bitcoin futures to profit from price movements without owning the actual Bitcoin. They can go long (buy) if they expect the price to rise or go short (sell) if they expect the price to fall. Risk Management: Institutional investors and cryptocurrency businesses use futures to hedge their exposure to Bitcoin's price volatility. For example, miners can lock in prices for future sales. Liquidity: Bitcoin futures markets provide liquidity, allowing participants to enter and exit positions more easily than the spot market. 2. Key Features of Bitcoin Futures: Standardized Contracts: Bitcoin futures are standardized contracts with specific terms, including the contract size, expiration date, and trading hours. These standards make it easier for traders to participate. Settlement Methods: Bitcoin futures contracts can be physically settled (delivery of actual Bitcoin) or cash-settled (payment in fiat currency based on the price at contract expiration). Leverage: Futures trading often allows traders to use leverage, which means they can control a larger position than their initial capital. This can amplify both profits and losses. Expiration Dates: Each futures contract has an expiration date, after which the contract is settled. Traders need to close their positions or roll them over to a new contract before the expiration.
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