What Is Futures?

In futures trading, the parties buy and sell not the asset itself but a contract tied to its price. The party expecting the price to rise opens a long position, and the party expecting it to fall opens a short position. Contracts are closed at expiry either by physical delivery or, more commonly, by cash settlement. On crypto exchanges, the most common type is the perpetual futures contract, which has no expiry date and whose price is kept close to the spot price through a funding rate mechanism.

Futures are also found in regulated markets; for example, Bitcoin futures have traded on the CME since 2017. Miners and institutional investors can use these contracts to reduce the price risk of assets they hold or will acquire in the future. The amount of open positions and funding rates in futures markets are also tracked to monitor market expectations.

The most important risk is leverage. Because positions many times larger than the collateral can be opened, even a small price move can lead to the complete loss of the collateral, that is, the liquidation of the position. In sudden price movements, cascading liquidations can occur. In Turkey, crypto asset service providers are subject to the permission and supervision of the Capital Markets Board (SPK); it is important for users to check the legal status of the platform they trade on.