Binance Completes Futures Testing, Launches Limited Trading
Binance futures are still not widely available, but may become a factor in price discovery.
Binance completed the testing stage of its futures trading feature, moving on to an invitation-only limited launch. The Binance exchange tested two types of futures-trading platforms over the past days, causing mixed reactions from the early traders.
Following the test period, Binance CEO and co-founder Changpeng “CZ” Zhao announced the full launch would come soon.
Traders are now reporting there is limited access for continued trading before a wider public launch:
A few days ago, the Binance Futures program was accused of copying the model of BitMex, the leading futures market. Documents about the futures rules and restructions suspiciously resembled those of BitMex.
According to Zhao, the reason may have been a previous document built by the JEX exchange, which was not updated. Later, Binance Futures went on to build a new set of documents.
Futures contracts allow investors to speculate on the price movement of the underlying asset. In addition to that, exchanges may offer leverage, in the case of Binance, up to 100X. This may create higher gains, but also lead to deeper losses in the event of a margin call.
In the past, BitMex futures have added to the sentiment of Bitcoin (BTC), as well as Ethereum (ETH), setting the expectation for future price movements. Currently, large-scale markets like OKEx and Huobi also offer futures, with increasing interest in trading in the past day:
Futures are considered extremely risky in crypto space, as BTC is capable of significant price swings in a short time span, leading to sudden liquidations.
Futures trading on crypto exchanges remains much riskier and more volatile compared to current offerings for mainstream investors, including the CME dollar-settled futures, and the upcoming Bakkt physical delivery futures. With those types of products, trading stops beyond a predetermined price range, to avoid the effect of high volatility.