Are you interested in starting crypto trading but feel confused by terms such as futures and leverage? This article will be a complete guide for those of you who want to understand the concept of trading Solana futures.
In this article, we will explain in simple and detailed terms what Solana futures are, how they work, and the associated benefits and risks.
What are Solana Futures?
Solana futures are contracts that provide the right and obligation to buy or sell a specified amount of Solana (SOL) at a predetermined price in the future. The Solana futures market offers two main features for cryptocurrency traders:
1. Leverage: Purchasing Solana futures allows traders to control more Solana tokens using leverage (usually 10x to 50x).
2. Profit from price reduction: Selling Solana futures allows traders to profit from downturns in SOL price.
Solana futures traded on most cryptocurrency exchanges today do not have an expiration date, so they are also referred to as Solana perpetual futures or Solana perpetual swaps.
Solana vs. Ethereum
Solana is starting to attract attention as a serious competitor to Ethereum, even though its market capitalization is about four times smaller than that of the leading smart contract platform.
On October 23, the SOL/ETH trading pair reached a new record high of around 0.0692 ETH. The move is part of a bullish trend that has risen 600% since 2023.
Solana's rise against Ethereum has sparked discussions about its potential to surpass Ethereum's market capitalization in the not-too-distant future.
At the center of Solana's bullish outlook is increased network usage and an upcoming update that could potentially reduce Ethereum's dominance in blockchain.
Can SOL Defeat ETH?
The possibility of Solana surpassing Ethereum in terms of technical capabilities and market valuation may increase as Solana meme-coins have been a key driver of Solana's recent growth.
Historically, meme-coins have thrived in bull market conditions when speculation runs high, but they have faced severe corrections during market downturns.
Currently, Solana needs to grow 3.5 times its current market cap to reach Ethereum's $304 billion valuation. However, analysts at VanEck speculate that Solana could reach 50% of ETH's value in the next few years if it continues to outperform Ethereum in terms of daily active users and transaction volume.
Meanwhile, Bitfinex analysts suggest that Solana's success depends on expanding its user base beyond speculative traders. To achieve sustainable long-term growth, Solana needs to attract DeFi enthusiasts, traditional financial institutions, and enterprises.
They noted that a Firedancer update in 2025, which aims to increase Solana's capacity to handle up to 1 million transactions per second, could potentially make its network more attractive to larger investors and institutions.
Solana Continues Uptrend with 13.58% Monthly Gain
2024 has been a fantastic year for Solana investors as this premier altcoin has risen 481% since November 2023. Although Solana's growth has slowed, it is still amid a bullish trend with Solana currently trading at US$181,072 with growth of 3.02% in the last 24 hours.
It can be seen from the Solana futures price chart above. The RSI, MACD, and Bollinger Bands indicators show the positive side. Solana's RSI is at 67.11, which means the buying trend is greater than the selling trend in the sense that it is positive, not overbought. The MACD line is also above the boundary line so the bullish signal is very strong at the moment.
Conclusion: Buying Solana Futures
You buy Solana futures if you want to profit from Solana price increases in the future. This trading strategy is also known as opening a long Solana futures position.
With 10x leverage, buying a $100 Solana futures contract would allow you to 'own' $1,000 worth of Solana. However, please note that if the price of SOL falls by more than 10%, you will lose your entire $1,000 investment as your position will be liquidated.
Simple example:
Suppose SOL is trading at 10 USDT per token. A trader futures Solana bullish and decides to open a long Solana futures position at that price by purchasing 1,000 Solana futures contracts with 10x leverage.
With each contract having a contract size of 1 SOL, the initial margin required to open this position is 1,000 x $10 / 10 = $1,000. Depending on the price performance of SOL, traders can make a lot of money or lose their entire investment.
However, the most important thing is that before deciding to invest in Solana futures, you must also carry out in-depth research on this investment instrument. Moreover, crypto is an investment instrument with prices that are so volatile that price changes are common. Checking prices regularly will help you assess how stable a token will be in the future.
Conduct detailed research by utilizing various Bitrue features, starting from the price feature, and price conversion from SOL to USD, to reading articles on the Bitrue blog to find out about the projects being carried out by the token network you are looking for.
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