In the US, crypto Futures are limited to CFTC-registered platforms, ensuring trustworthiness.
Despite growing demand, the CFTC regulates to maintain reliability.
This article outlines US options for trading crypto Futures, covering popular platforms and product offerings, and offers guidance on selecting the right exchange.
The Current State of Crypto Futures Trading in the US
As of 2021, the US crypto Futures trading market is booming, with platforms like CME and ICE leading the way.
CME offers Bitcoin Futures, including Options trading, while ICE’s Bakkt provides physically settled Bitcoin Futures.
Crypto-native exchanges like ErisX and LedgerX also contribute to the competitive landscape.
Despite the market’s growth, it’s crucial to note the volatility and risks, emphasizing the need for informed decision-making.
Exchanges seek CFTC approval to tap into the expanding US trading market.
How & Where To Trade Crypto Futures In the USA?
In the United States, crypto Futures can be traded on several platforms that are registered with the Commodity Futures Trading Commission (CFTC).
Some of the most popular platforms include:
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Chicago Mercantile Exchange (CME)
CME provides Bitcoin Futures and Options trading, enabling both institutional and cautious retail investors to profit from Bitcoin’s price movements without owning the assets.
The Futures, featuring different expiries and cash-settled contracts, cater to traders interested in short-term or medium-term Bitcoin investments.
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Intercontinental Exchange (ICE)
Bakkt by ICE provides physically settled Bitcoin Futures for trading.
It’s ideal for those looking to ‘stack sats’ or grow their Bitcoin holdings.
When closing or upon expiration, settlements will debit or credit Bitcoin to your trading account.
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ErisX
ErisX, a CBOE Global Markets Company, is a regulated exchange for cryptocurrency Spot and Futures trading.
It provides both Cash-settled and Physically-settled contracts in Bitcoin and Ethereum, enabling traders to access both types of Futures contracts on a single platform.
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LedgerX
LedgerX is a regulated exchange for Bitcoin Futures and Options, offering mini contracts starting at 0.01 BTC.
Contracts have expiries for the next two consecutive and quarterly months, with physical settlement.
Ethereum Futures will be added soon. Note platform availability varies, and thorough research is advised before trading crypto Futures.
How to choose the best exchange to trade crypto Futures in the USA?
Choosing the best exchange to trade crypto Futures in the United States depends on your individual needs and preferences. Here are some factors to consider when making your decision:
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Regulations
Ensure the exchange is CFTC-registered, adheres to state regulations, and stays compliant.
Stay vigilant as the CFTC and SEC actively enforce regulations, swiftly banning non-compliant exchanges.
If trading on such exchanges, promptly close positions and withdraw funds before assets are permanently frozen.
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Fees
Compare various exchange fees, such as trading, overnight financing, and withdrawal fees.
For perpetual crypto Futures, note that a significant fee is the Funding fee, utilized to align spot and Futures prices.
In a negative fee scenario, short position holders pay long position holders when the funding countdown concludes.
Conversely, in a positive fee situation, long position holders pay short position holders.
Read more: Why is crypto so volatile?
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Platform
Evaluate platform usability, interface, and order types for swift trading.
Confirm if it supports API for automation or copy trading, based on your preference.
A quality platform is user-friendly, provides order varieties (Limit, Market, Stop Limit, Stop Market), and maintains a deep order book for sufficient liquidity in limit trades.
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Liquidity
Opt for high-volume exchanges with deep order books for seamless trade entry and exit.
Avoiding this may lead to slippage, risking orders being filled at a less favorable price than intended.
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Security
Choose exchanges with a strong security reputation, employing measures like cold storage and multi-sig withdrawals.
Avoid those with a history of hacks for your safety.
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Customer support
Look for exchanges that offer good customer support in case you have any questions or issues.
This will put you at ease when using the exchange that, in case something does go bad, there is a dedicated team to assist me in setting it right.
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Available cryptocurrencies and trading pairs
Check if the exchange has the crypto futures and trading pairs you desire.
Trading less popular coins outside the top 20 carries high risk-reward, but you need an exchange offering them to invest.
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Leverage
Check the exchange for maximum leverage options, and confirm if cross-margin and isolated-margin trades are available.
Leverage, when used wisely with technical analysis, can boost profits rapidly, but it also poses higher loss risks if the market moves unfavorably.
Stay informed about the platform’s maximum leverage and related policies to manage risks effectively.
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Deposits and Withdrawals
Choose an exchange with seamless fiat and crypto deposits and withdrawals.
If the process is complicated, it’s usually not worth the effort.
Numerous exchanges offer similar services, giving you plenty of options.
Read more: Can you buy XRP on Crypto.com?
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Historical Data
Optional but beneficial: Historical data availability is useful for backtesting strategies and guiding future decisions in trading.
Technical analysis relies on historical data to enhance entry and exit points.
Before selecting a crypto Futures exchange, conduct thorough research and due diligence.
Be mindful of the risks and only invest what you can afford to lose.
Conclusion
Crypto Futures trading in the USA is booming, with a growing number of platforms.
CME and ICE, known for traditional Futures, offer diversification.
Stay updated on the regulatory status of your chosen exchange, as rules change frequently.