How the newly listed Hive perpetual futures trading works?

The idea of writing a post on how the Hive futures works started after seeing a lot of information posted about it, but without any clarity or explanation of the mechanics of trading them. While I am not an expert of this either, after doing quite a bit of reading I think I got to have some clarity on it. This is a novelty for the Hive users and it offers a new way of trading, so before doing that I believe we need to understand how things work and what risks and benefits this brings. Also Having Binance listing Hive as a perpetual future contract it puts the spotlight for this cryptocurrency and blockchain and might encourage other exchanges to do the same.

Future contracts

First of all the futures contracts are agreements to buy or sell an asset at a predetermined price at a specific time in the future. This kind of trading allows participants to speculate on the price of Hive without needing to own it outright. This way traders can profit from both upward and downward price movements, depending on their positions.

Perpetual future contracts

On the other side, the perpetual futures contracts, unlike traditional futures, don’t have an expiration date. This means that traders can hold the positions indefinitely, provided having sufficient margin to maintain them. These contracts are a derivative product that allows you to speculate on the price of Hive without actually owning the token. Perpetual futures are designed to mimic the spot market but come with added benefits, like leverage and the ability to profit from both rising and falling markets.

How to perpetual future contracts work?

Well, you simply decide whether to “go long” (bet on the price of Hive to rise) or “go short” (bet on the price of Hive to fall). Since these contracts don’t expire, you’re not constrained by any deadline to close your position. Instead, a mechanism called the funding rate ensures that the contract’s price stays close to Hive’s spot market price.

The funding rate is a small periodic payment exchanged between traders. If the perpetual futures price is higher than the spot price, traders holding long positions pay an interest to traders holding short positions, encouraging the market to balance. Conversely, when the perpetual futures price is lower than the spot price, short traders pay an interest to the long traders. This unique mechanism ensures that the perpetual futures market remains tethered to Hive’s actual market value.

Binance Link: https://www.binance.com/en/futures/HIVE_USDT

How is Hive benefiting from this?

What makes this exciting for Hive is the increased liquidity and visibility. Binance’s listing of Hive perpetual futures exposes the token to a much larger audience of traders. Many of these traders might not have been familiar with Hive before, but now they have a reason to explore its blockchain, ecosystem, applications and games from here. This influx of attention can drive more awareness, adoption, onboarding and potentially increase the value of Hive over time.

Hedging

Additionally, perpetual futures provide opportunities for hedging. Developers, investors, or projects with significant Hive holdings can use these contracts to protect against downside price risk. By opening short positions in the perpetual futures market, they can offset losses in their holdings if Hive’s price drops. This kind of risk management tool can attract more serious investors and institutions to the Hive ecosystem.

Leverage

The availability of leverage provides a very dynamic market for the Hive futures. While leverage allows traders to control a much larger position with a smaller amount of capital—say, using 10x leverage to amplify your exposure tenfold—it also magnifies losses. A small price movement against your position can lead to liquidation if you don’t have enough margin to maintain your trade. This makes it crucial for traders to have a solid risk management strategy and a clear understanding of how leverage works.

Supply dynamics

Another thing that I believe makes Hive so attractive is that it doesn't have a huge supply, thus it allows for high swings up and down (Circulating Supply is around 463,577,875 Hive tokens). This makes the trading quite thrilling and if you are using futures it can make you rich very fast, but bankrupt as fast as well. Thus you need to play this with attention and not let the adrenaline get the best of you.

From my point of view, the addition of Hive perpetual futures on Binance is a huge step forward for the Hive blockchain. It enhances the token’s liquidity, increases its visibility, and provides tools for hedging and speculation that weren’t previously available. For traders, perpetual futures offer exciting opportunities, but they also come with high risks. If you’re new to this, my advice is to start small, familiarize yourself with the mechanics, and use risk management strategies that involve low leverage or stop-loss thresholds.

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