$BTC Bitcoin futures are derivative contracts that obligate a buyer and seller to exchange Bitcoin at a predetermined price on a specified future date. The key things to understand are:

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Derivative Product: Their value is derived from the price of Bitcoin (the underlying asset).

Cash-Settled: Most Bitcoin futures, especially on regulated exchanges like the CME, are cash-settled. This means that at expiration, instead of exchanging actual Bitcoin, the difference between the contract price and the settlement price is paid in cash. You never physically own or receive Bitcoin. +1

Leverage: Futures contracts often allow for leverage, meaning traders can control a larger position with a smaller amount of capital (initial margin). While this amplifies potential profits, it also significantly increases potential losses.

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