Bitcoin futures are financial derivatives that enable investors to either buy or sell bitcoin without actually touching the digital currency itself.
More specifically, bitcoin futures contracts oblige the investor to buy or sell bitcoin at a predetermined price on a predefined future date. They are standardized, detail the quantity of the underlying asset, and trade on exchanges.
Bitcoin futures can, therefore, be used to make directional bets on the price of bitcoin or to hedge a digital asset portfolio by shorting bitcoin using bitcoin futures contracts.
Regulated bitcoin futures were approved in late 2017 by the US Commodity Futures Trading Commission (CFTC), after which both the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE) launched bitcoin futures trading. This was a monumental milestone for bitcoin as it gave the digital asset class a major regulatory stamp of approval for the first time in its history.