Bitcoin futures are contracts that allow investors to speculate on the future price of Bitcoin. Instead of buying or selling Bitcoin directly, participants agree to trade a set amount of Bitcoin at a predetermined price on a specified date.

These contracts are typically traded on futures exchanges, where buyers and sellers can go long (betting the price will rise) or short (betting it will fall). This allows traders to profit from price fluctuations without holding the actual asset.

One key aspect of Bitcoin futures is leverage. Traders can control a larger position than their initial investment by borrowing funds. This can amplify both potential gains and losses, making it crucial for investors to manage their risk carefully. Bitcoin futures also serve as a hedging tool for those who hold Bitcoin and want to protect their investments from price declines. Overall, they contribute to market liquidity and price discovery, making them an important part of the Bitcoin trading ecosystem.