#SpotVSFuturesStrategy ๐ Spot vs Futures: The Basics
Aspect Spot Market Futures Market
What you trade? The actual asset (e.g. BTC, ETH) A contract to buy/sell the asset at a future date
Settlement Immediate (you own the asset) Later (on expiry or position close)
Leverage Usually no leverage Leverage is common (e.g. 10x, 20x)
Risk Youโre exposed to price movements Exposed to price movements + funding rates, liquidation risk
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๐ Common Spot vs Futures Strategies
1๏ธโฃ Basis Trading (Cash and Carry Arbitrage)
You buy the asset on the spot market (e.g. BTC)
You short the same amount on futures
Capture the difference (basis) between spot price and futures price
Works when futures trade at a premium (contango)
โ Goal: Lock in risk-free profit if funding rates or premium are high.
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2๏ธโฃ Hedging
You hold spot BTC/ETH/other asset (long exposure)
You short futures to hedge against downside risk
Example: A miner holding BTC may short BTC futures to lock in revenue value.
โ Goal: Protect against price drops while keeping the underlying asset.
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3๏ธโฃ Directional Leverage Strategy
Spot market for long-term holding
Futures for leveraged directional bets
Example: You hold BTC spot but take a leveraged futures long or short for swing trading.
โ Goal: Amplify gains without touching your spot position.
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4๏ธโฃ Funding Rate Farming
Buy spot asset
Short perpetual futures
When funding rates are positive, shorts get paid funding by longs โ earn passive income
โ Goal: Collect funding payments while staying market neutral.
