Which is better, contracts or spot trading? I will elaborate on a few points below, hoping to help you.

In the cryptocurrency market, the debate between contracts and spot trading has never ceased. Some believe that contracts are "wealth amplifiers," while others see them as "meat grinders"; some praise spots as "value investments," while others criticize their "inefficiency." This article will dissect the essential differences between the two from three dimensions: underlying logic, risk-return ratio, and applicable demographics, and provide practical suggestions in light of the market characteristics of 2024.

1. Genetic Differences in Risk Mechanisms

The essence of spot trading is the transfer of asset ownership. When you buy 1 BTC on Binance for $30,000, regardless of how the price fluctuates, you always hold the right to dispose of 1 BTC. In extreme cases, even if the price drops to zero, there remains a theoretical opportunity to wait for the project to revive (as some users ultimately recovered their assets after the Mentougou incident).

The core of contract trading lies in the risk exposure game. For example, using 20x leverage to long BTC essentially uses 5% margin to leverage a 100% nominal principal risk position. Here, there are three layers of risk multipliers:

  1. Leverage ratio: Price fluctuations are amplified by 20 times, a 5% reverse fluctuation triggers liquidation

  2. Funding rate: Perpetual contracts charge a fee rate of 0.01%-0.1% every 8 hours, and the cost of long-term positions should not be ignored

  3. Liquidity trap: Under extreme market conditions, exchanges may not be able to liquidate at the marked price (refer to the 519 incident of 2021)

According to Bybit's 2023 statistics, contract traders' average holding time is only 4.2 hours, while the median holding period for spot trading is 17 days, which intuitively reflects the difference in risk tolerance between the two.

2. The underlying logic of profit structure

Spot profit formula: Return = (Selling price - Buying price) / Buying price - Trading fees
Contract profit formula: Return = (Closing price - Opening price) / (Margin * Leverage) - Funding rate - Trading fees

On the surface, contracts have the profit advantage brought by leverage, but in practice, there are three hidden costs:

  1. Time decay: Friction costs generated by high-frequency trading in a volatile market

  2. Psychological loss: Decreased sleep quality and distorted decision-making due to leveraged positions

  3. Opportunity cost: Margin occupation affects other investment opportunities

Taking the Q4 2023 market as an example:

Spot investors buying BTC at $34,000 on October 26 and holding until December 31 (at $42,000) can achieve a 23.5% return

If contract investors use 3x leverage to long during the same period, theoretical returns can reach 70.5%, but actual sample statistics show:

47% of traders stop loss due to mid-way pullbacks

22% were liquidated due to excessive leverage

Only 31% achieve more than 50% returns

This confirms the old saying on Wall Street: 'Leverage amplifies not only returns but also human weaknesses.'

3. Strategy choices in the 2024 market environment

Current cycle characteristics:

Bitcoin ETFs bring continuous inflow of institutional funds

Federal Reserve's interest rate cut expectations push up risk asset valuations

Altcoins show significant differentiation (AI, Depin, RWA, etc. sector rotation)

Corresponding strategy suggestions:

  1. Spot is more suitable for:

  2. Long-term allocation in BTC/ETH (core assets under institutional trends)

  3. Layout of high fundamental quality altcoins (such as AR, RNDR, etc. infrastructure projects)

  4. Dollar-cost averaging strategy (using market volatility to dilute costs)


  1. Contracts can be cautiously participated in:

  2. Event-driven opportunities (such as ETF fund flow data release, Federal Reserve meetings)

  3. Futures-spot arbitrage (low-risk strategy with annualized returns of 8-15%)

  4. Hedging spot position risk (e.g., shorting BTC to hedge β risk when holding altcoins)

4. The self-positioning rules for traders

Use three questions to determine which method you should choose:

  1. Time investment: Can you monitor the market for more than 4 hours daily? Contracts require continuous market monitoring

  2. Risk tolerance: Can you tolerate a loss of 50% of your principal in a single trade? Liquidation is a norm in contracts

  3. Knowledge reserve: Are you proficient in candlestick patterns, order flow analysis, and Greek value calculations?

If more than two of the above questions are answered with 'no', it is recommended to start accumulating from spot. Mature traders often adopt a 70:30 allocation: 70% of funds for spot value investment and 30% for contracts to capture short-term opportunities.

Conclusion: Beyond the tool dispute

Contracts and spot trading are fundamentally different dimensional tools, like a surgeon's scalpel and a traditional Chinese medicine practitioner's silver needle. What truly determines profit is the user's understanding of the essence of the market—bull-bear cycles, capital flows, group psychology. 2024 may be the institutionalization year for the crypto market; ordinary investors are advised to establish a combination strategy of 'core asset spot positions + derivatives risk hedging' to hold onto chips amidst volatility and expand gains in trends.

I am Fan Fan, focusing on the crypto space for many years, sharing useful and diverse professional knowledge. If you're destined to meet, who will guide you if not money? Follow Fan Fan, and I'll help you unlock the matters within the circle, clearing the fog of the crypto market. I hope our encounter is filled with friendliness and harvest!$ETH $XRP #加密市场回调 #SOL上涨潜力