How to choose Futures Trading underlying assets?

BTC, ETH is the bellwether of the entire crypto asset market

BTC是合约交易首选标的

As the originator of the entire crypto asset, BTC has always determined the bull and bear of the entire crypto asset market. There is a strong correlation between the overall altcoin trend and the BTC market trend. Therefore, when choosing a futures trading pair, BTC is the preferred consensus of all crypto asset contract players. The following chart shows the trend of BTC market share:

#ETH是山寨币行情的风向标

ETH has long ranked second in the market capitalization of crypto assets, with a market share of up to 20%. The market trend of ETH is positively correlated with BTC, and due to the identity of Ethereum as the world’s first public chain, it has a huge and prosperous application eco, covering almost all crypto asset track sectors such as Defi, NFT, Gamefi, and the metaverse. While ETH follows the trend of BTC, its rise and fall is also higher than that of BTC in the same period, and ETH is also the vane of the altcoin market.
Therefore, ETH is also the most popular trading target for crypto asset contract players.

选择山寨币合约需要考虑的因素

市值

Market capitalization is an important indicator to measure the merits of a crypto asset project, and the higher the market capitalization, the more users who hold the asset, and the better the market consensus. Under the same conditions, the target with a high market capitalization is better than the one with a low market capitalization, and the higher the market capitalization, the more stable the asset price, and the smoother the volatility in the face of extreme markets, and the risk of extreme liquidation for contract trading is greatly reduced.

Market capitalization can be obtained through Coinmarketcap: https://coinmarketcap.com/zh/ or Coingecko: https://www.coingecko.com/ Check these two major crypto asset tools.

24-hour volume

In the cryptocurrency futures trading market, liquidity is crucial. A high liquidity market means more reasonable asset pricing, smaller market fluctuations, easier trading, smaller slippage, and more accurate reflection in technical indicators.

How to measure the liquidity of a trading pair? The main factors to consider are the spread, depth, and volume. Among these, you can focus on the 24-hour volume as a key indicator. In the list of perpetual futures trading pairs in the U market, they are ranked based on the 24-hour volume from high to low by default. Considering this, the preferred targets are those with higher rankings.

Market Heat and Volatility

In the cryptocurrency market, assets are classified by concepts, with different themes such as Defi, NFT, Metaverse, gaming, storage, Polkadot, etc. There are always market hype and speculation around these themes at different times. The performance in the market is reflected by the ups and downs of prices, which lead investors to chase the price or sell with bearish market. These assets are often considered as high-quality trading targets. Therefore, assets with large price fluctuations on the trading pair list should be closely followed.

Summary of this issue

This issue mainly introduces a practical futures trading technique - how to choose the best underlying asset from hundreds of futures trading pairs. Generally speaking, BTC and ETH are the preferred choices for traders, followed by selecting the best currency pairs based on trading volume and price fluctuations. In addition, it is also important to focus on the leading coins in various concept zones.

For more contract practice, please go to the Gate.io Futures Platform and click Register to start the contract journey.

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