Crypto futures vs spot trading

Owning the coin versus holding a contract

On spot you exchange one asset for another and the coin you bought is yours to hold, transfer or withdraw to your own wallet. On futures you hold a position in a contract, most often a perpetual, whose value follows the price. Profit and loss are settled in the margin currency, and there is no coin to withdraw.

That difference decides what each market is for. Spot suits buying an asset to keep or to move off the exchange. Futures suit taking a view on price for a limited time, in either direction, with less capital tied up. The mechanics of the contract are covered in the guide to perpetual futures.

Trading fees: futures are lower per fill

Futures fees are lower than spot fees at most exchanges. On the 9 exchanges AffMiss compares, the published base-tier taker fee runs from 0.035% to 0.06% on perpetual futures and from 0.05% to 0.10% on spot. Both are charged on the full value of the trade, on the way in and again on the way out.

On a $10,000 trade, entering and leaving with market orders costs between $7 and $12 on futures and between $10 and $20 on spot. Maker fees, charged on resting limit orders, are lower on both. The rates per exchange are in the table of lowest-fee crypto exchanges by published rates.

The comparison changes with leverage. A futures fee is charged on the position, not the margin: $10 of round-trip fees on a $10,000 position held with $1,000 of margin at 10× is 1% of that margin.

Funding: the holding cost spot does not have

A spot holding costs nothing to keep. A perpetual futures position pays or receives funding at every funding interval, on its full value, for as long as it is open. Over a short trade the amount is small. Over weeks it can exceed the trading fees several times, which is why futures are usually the dearer way to hold a long for a long time.

As an illustration, at a funding rate of 0.01% every eight hours a $10,000 long pays $1 per interval, $3 a day and $90 over 30 days, which is 0.9% of the position. If the futures round trip costs $10 and the spot round trip $20, the $10 saved in fees is used up after ten funding intervals, or about 3.3 days. Funding rates are set by the market on each contract, change constantly and can turn negative, in which case longs receive the payment.

Leverage and liquidation: the risk spot does not have

An unleveraged spot holding can fall in value but cannot be liquidated: you still own the same number of coins after a crash. A futures position is closed by the exchange when losses reduce its margin to the maintenance requirement. At 10× with a 0.5% maintenance rate that takes a move of about 9.5% against the position, and the margin assigned to it is lost.

Leverage does not change what a price move is worth in dollars. A 5% move on a $10,000 position is $500 on spot and on futures alike. On futures with $1,000 of margin, that $500 is 50% of the margin. Spot margin trading, where the exchange lends you funds to buy more, also carries liquidation risk and charges interest on the loan; it is a different product from plain spot.

Going short and hedging

Futures let you profit from a falling price by opening a short, which plain spot cannot do: on spot the most you can do is sell what you own. A $10,000 short gains about $1,000 if the price falls 10%, and loses the same if it rises 10%. A short also changes who pays funding, since shorts receive it when the rate is positive.

The same mechanism makes a hedge. Someone holding 0.5 BTC bought at $60,000 can open a 0.5 BTC short perpetual. If the price falls to $54,000, the spot holding loses $3,000 and the short gains $3,000, before fees and funding. The hedge has its own margin and its own liquidation price if the market rises, so it needs to be sized and monitored.

Custody and counterparty risk

Coins bought on spot can be withdrawn to a wallet you control, which ends your exposure to the exchange. A futures position exists only on the exchange that issued it, and the margin behind it has to stay there while the position is open. Using futures therefore means keeping money on an exchange for the whole life of the trade.

Withdrawing has its own cost, a network fee that differs by exchange and by chain, and it is not part of the trading fee schedules compared on this site. Availability also differs: derivatives are restricted or unavailable to retail traders in a number of countries where spot trading is allowed, and exchanges apply those rules by place of residence.

Which one fits which trade

Use the product that matches the holding period and the direction. Spot fits buying to own, long holding periods and anything you intend to withdraw. Futures fit short holding periods, short positions, hedges and trades where capital efficiency matters more than holding cost. For the futures side, the fee differences between venues are in the ranking of crypto futures exchanges by published fees.

• Buying to hold for months: spot. No funding, no liquidation, and the coin can leave the exchange.
• A trade lasting hours or days: futures fees are lower per fill, and funding has little time to add up.
• A view that the price will fall: futures, since plain spot cannot go short.
• Protecting a spot holding through an event: a short perpetual of the same size, with its own margin and stop.
• New to both: spot first. A mistake costs part of the holding rather than the whole margin within minutes.

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