How to earn on crypto futures?

To earn on crypto futures, you can use strategies like speculation, arbitrage, and hedging, all while managing risk and understanding how leverage amplifies both potential profits and losses. 

Key strategies for earning on crypto futures

Speculation

Speculation is the most common method, where you predict future price movements of a cryptocurrency. 

• Going long: You buy a futures contract if you believe the price of the underlying cryptocurrency will increase. If the price rises by the contract's expiration (or when you close the position), you profit from the difference.

• Going short: You sell a futures contract if you anticipate a price decrease. You profit by buying the contract back at a lower price. 

Arbitrage

This strategy involves exploiting the temporary price differences between a crypto's futures market and its spot market price. 

• For example, you could buy a crypto on a spot exchange where it is cheaper and simultaneously sell a futures contract for the same crypto on another exchange where it is more expensive. This allows you to lock in a risk-free profit from the price discrepancy. 

Hedging

Hedging uses futures to mitigate the risk of price volatility in your crypto portfolio. 

• If you own Bitcoin, for instance, you could open a short futures position. If Bitcoin's price drops, the profit from your short futures position can offset the loss in value of your actual Bitcoin holdings. 

Essential concepts for profitability

Leverage

Leverage allows you to control a large futures position with a smaller amount of capital, amplifying both potential gains and losses. 

• Example: With 10x leverage, a $1,000 deposit can be used to open a $10,000 position. A 5% market movement in your favor would result in a $500 profit (50% return on your initial margin) instead of $50 (5% of your initial margin).

• High leverage significantly increases the risk of liquidation, where the exchange automatically closes your position if the market moves against you too much. 

Funding rates (for perpetual futures)

In perpetual futures, which have no expiration date, a funding rate mechanism helps anchor the futures price to the spot price. 

• Positive funding rate: If the futures price is higher than the spot price, traders with long positions pay a fee to traders with short positions.

• Negative funding rate: If the futures price is lower than the spot price, shorts pay longs.
• Traders can use this to their advantage. For instance, in a highly negative funding rate environment, a trader can go long and collect payments from short traders. 

Managing risk and getting started

• Start with a demo account: Practice your strategies in a risk-free environment to understand how they work before using real funds.

• Define your strategy: Select a strategy that fits your risk tolerance and experience level, whether it's day trading, swing trading, or trend following.

• Use risk management tools: Employ stop-loss and take-profit orders to automatically close your positions at predefined price points, limiting potential losses and securing gains.

• Choose your leverage wisely: Beginners should start with low leverage (e.g., 2x to 5x) to limit exposure to market volatility

Below are five examples that a trader could in principle execute on Deribit.

Prices, fees and funding rates are illustrative; always check the live order book before acting.

1. Directional long with fixed-maturity BTC futures

• Initial data: BTC-26JUN25 trades at 60 000 USD; maker fee = -0.01 %, taker fee = 0.05 %.
• Trader deposits 1 BTC as collateral (≈60 000 USD). Cross margin.
• Opens a 10-contract long (each contract = 1 USD of BTC value) with 10× leverage: notional 600 000 USD. Entry commission ≈600 000 × 0.0005 = 300 USD.
• Price rallies to 66 000 USD. Unrealised PnL = 600 000 × (66 000–60 000)/60 000 = 60 000 USD.
• Closes at market (another 300 USD fee). Net profit ≈59 400 USD, ROE ≈99 % on the original 60 000 USD of collateral. Liquidation level (cross) was roughly 54 600 USD, showing the tight risk window that comes with 10× leverage.

2. Cash-and-carry basis trade (delta-neutral)

• Spot BTC = 60 000 USD. Same BTC-26JUN25 future trades at 63 000 USD (5 % premium, 90 days to expiry ≈ 20 % annualised).
• Trader buys 10 BTC spot (600 000 USD) on an external exchange, sends to Deribit.
• Simultaneously shorts 10 BTC worth of the June futures at 63 000 USD on Deribit. Fees ≈(600 000 + 630 000) × 0.0005 ≈ 615 USD.
• Holds until settlement. If at expiry spot equals 61 000 USD, the short future is marked there and the trader:

Gains (63 000 – 61 000) × 10 = 20 000 USD on the short futures.
Has a 1 000 USD mark-to-market loss on the spot (60 000→61 000).
Net before fees ≈19 000 USD; after fees ≈18 385 USD ≈ 3.1 % on capital tied up for three months (≈12.4 % annualised) with minimal market-direction risk.

3. Funding-rate capture on BTC perpetual vs. quarterly future
• Deribit BTC-PERP currently pays +0.01 % funding every eight hours (≈10 % annualised). The quarterly future is at fair spot price.
• Trader sells 100 BTC of PERP and buys 100 BTC of BTC-26JUN25, locking a flat delta.
• Funding receipts: 100 BTC × 60 000 USD × 0.0001 = 600 USD every eight hours. Over 30 days that totals roughly 54 000 USD.
• Convergence drift between PERP and the quarterly contract is generally small; when deviation arises the trader can unwind for additional few-basis-point gains or roll the hedge as funding decays.

4. Calendar spread (term-structure trade)

• Prices: BTC-30MAY25 = 61 200 USD; BTC-27SEP25 = 64 000 USD.
• Premium between contracts = 4.57 %. If historical average for that tenor gap is 6 %, a mean-reversion thesis suggests going long the near-dated and short the far-dated.
• Position size 50 BTC each leg:

– Long 50 BTC of MAY @ 61 200.
– Short 50 BTC of SEP @ 64 000.

If over the next month the spread widens to 6 % (say MAY 62 000, SEP 66 700), the trader books:
– +40 000 USD on the long (62 000–61 200) × 50.
– –135 000 USD on the short (66 700–64 000) × 50.
– Net +5 000 USD after two legs’ entry/exit fees (≈6 250 USD gross – 1 250 USD fees). The strategy’s delta remains near zero; profit stems purely from curvature of the term structure.

5. Protective short hedge against an existing ETH spot stack

• Portfolio: long 5 000 ETH bought long ago at 800 USD. Current spot 3 000 USD (15 000 000 USD notional). Investor wishes to protect 50 % of downside for the next month.
• ETH-27JUN25 future at 3 020 USD. Short 2 500 ETH contracts.
• If ETH falls to 2 500 USD, the spot drawdown = 2 500 × 5 000 = –2 500 000 USD. The short future gains (3 020–2 500) × 2 500 = 1 300 000 USD, cutting the portfolio loss roughly in half (minus ≈7 550 USD total fees).
• If ETH rises to 3 500 USD instead, opportunity cost appears: spot gains 2 500 000 USD, but the short loses (3 500–3 020) × 2 500 = –1 200 000 USD, leaving a net gain of 1 300 000 USD—still positive but reduced relative to an unhedged position.

! All examples ignore funding-rate variation, slippage and liquidation thresholds, which must be modelled before committing real capital. Futures are inherently leveraged; small price movements can trigger margin calls. Use test-net, start small, and know the maintenance margin requirements published by Deribit.