It’s time for some Weekend Wisdom 🔮
Futures dominate trading volume in crypto, but most never stop to ask: what exactly is a future, and why do markets revolve around them?
Let’s dig into how futures work and what makes them so powerful and also risky.
A future is a contract, not a coin.
It’s an agreement to buy or sell an asset later, at a price agreed now. No need to own the asset. Just a bet on where price goes next.
Futures turn markets into machines of speculation and hedging.
Futures offer leverage. Small moves create big gains or losses.
They let traders go long or short, hedge risk, or amplify it. But every position needs a counterparty, and every contract needs reliable collateral and pricing.
Most crypto futures don’t settle physically. They’re perpetuals: contracts with no expiry that use a funding rate to keep price close to spot.
That funding mechanism matters. It’s what aligns trader incentives and prevents runaway divergence.
Futures shape the market they track.
Price discovery often starts with derivatives, not spot. If futures get distorted by manipulation or poor data, the impact echoes across DeFi.
In crypto, futures are the signal and the system.
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