Introduction to Futures

Cryptocurrency futures contracts are agreements to buy or sell a specific amount of a digital asset at a predetermined price on a future date. These contracts allow traders to speculate on the price movements of cryptocurrencies without needing to hold the actual assets. Futures contracts can be used for hedging against price changes or for speculative purposes, offering various strategies for managing risk and exposure in the cryptocurrency market. At Bullish we offer two types of futures contracts: Dated futures, which have an expiration date, and perpetual futures, which do not expire and can be held indefinitely as long as margin requirements are met.

Both dated and perpetual futures are leveraged products – that is, they allow traders to control a larger position size with a smaller amount of capital. These instruments can amplify both potential gains and losses. Traders can take both long and short positions in dated and perpetual futures, allowing them to profit from market movements in either direction.

Dated futures and perpetual futures, while sharing certain similarities, exhibit distinct differences in their structure and expiration terms.

Bullish’s best-in-class cross-collateralization system maximizes your capital efficiency within each trading account. You can use the same collateral to easily and intuitively trade any combination of spot, margin, perpetuals and dated futures. Every trading account is segregated so there is no sharing of collateral, or risk, between accounts. To learn more, view the Understanding collateral article.

Whenever your position owes an amount of a settlement asset, the exchange will first attempt to reduce your trading account’s available spot balance of that settlement asset. Then the exchange attempts to borrow any residual amount from available loan offers on a first-come, first-served basis using the Margin service. You will simply need enough collateral to borrow the settlement asset at the end of the settlement period. To trade futures, you also need to be eligible for margin trading and have it enabled on your trading account. Learn more about how settlement works.

Similar to Bullish Automated Market Making Instructions for spot markets, the Bullish Order Book for futures markets also provides liquidity via a combination of an Automated Market Maker (AMM) and a traditional limit order book. Futures' AMM Instructions require collateral margin instead of actual assets and involve specifying long or short positions, with the size of the other position automatically determined. This differs from spot AMM where specific amounts of assets are provided.

In addition to your existing underlying dated futures position, you can submit AMM instruction contracts for buying and/or selling, similar to placing multiple limit orders in this market. It is important to note that a dated futures market AMM Instruction also entails a Margin Requirement. Learn more about how to calculate AMM Instruction Margin Requirements for Futures.