A futures contract is a derivative agreement to buy or sell an asset at a predetermined price on a specified future date. On BitMEX, all futures contracts are cash-settled, meaning no physical delivery of the underlying asset occurs. BitMEX offers inverse, linear, and quanto futures with leverage of up to 100x.
How Does A Futures Contract Work?
A futures contract is a standardised derivative product. It represents an agreement between two parties to exchange the value of an underlying asset at a set price on a fixed date in the future. One party goes long (agrees to buy) and the other goes short (agrees to sell).
On BitMEX, futures contracts are cash-settled. At expiry, the difference between the entry price and the settlement price is paid out in the margin currency. There is no physical delivery of Bitcoin or any other cryptocurrency.
Futures contracts have a fixed expiration date. When the contract reaches its settlement timestamp, all remaining open positions are automatically closed at the settlement price. The settlement price is derived from the underlying index price.
Traders use futures contracts to speculate on price direction, hedge existing spot holdings, or execute basis trading strategies that exploit the difference between futures and spot prices.
Learn more about futures here.
What Types of Futures Contracts Does BitMEX Offer?
BitMEX lists three types of futures contracts, each with a different settlement and payout structure:
Inverse Futures
Inverse futures are denominated in USD but margined and settled in Bitcoin (XBT). Each contract is worth a fixed amount of USD. As the underlying price moves, the Bitcoin value of the contract changes non-linearly. Inverse futures are suited to traders who hold Bitcoin and want USD-denominated exposure without converting to stablecoins. The non-linear payout means profits in BTC terms grow as the price rises, whilst losses in BTC terms accelerate as the price falls.
Linear Futures
Linear futures are margined and settled in either Bitcoin (XBT) or Tether (USDT), depending on the contract. The contract value moves in direct proportion to the underlying asset’s price change. Linear futures provide a straightforward payout structure where profit and loss scale linearly with price.
Quanto Futures
Quanto futures are margined and settled in Bitcoin (XBT) but track the price of an underlying asset denominated in a different currency (typically USDT). A fixed multiplier converts price movements into Bitcoin-denominated payouts. Quanto futures allow traders to speculate on altcoins whilst holding only Bitcoin as collateral. Note that traders are still exposed to Bitcoin/USD price risk when trading quanto futures, even when the underlying and quote currencies are not Bitcoin.
For detailed specifications on each type, visit the BitMEX Futures Guide.
How Is a Futures Contract Different from a Perpetual Contract?
The critical difference between a futures contract and a perpetual contract is expiry. A futures contract has a fixed settlement date. A perpetual contract does not expire.
| Feature | Futures Contract | Perpetual Contract |
|---|---|---|
| Expiry | Fixed date (quarterly) | None |
| Settlement | Cash-settled at expiry | No automatic settlement |
| Price Mechanism | Converges to spot at expiry | Funding rate anchors to spot |
| Basis Trading | Yes | Yes |
| Roll-Over | Required to maintain exposure | Not required |
Futures contracts often trade at a premium or discount to the spot price. This difference (the basis) narrows as the expiry date approaches and converges to zero at settlement. Perpetual contracts use a funding rate mechanism instead, with periodic payments exchanged between longs and shorts to keep the price near spot.
Both instrument types support high leverage on BitMEX. The choice between them depends on the trader’s strategy, time horizon, and preference for basis exposure versus continuous funding costs.