Definition ∞ Futures Contract Risk refers to the potential for financial loss associated with trading futures contracts, which are agreements to buy or sell an asset at a predetermined price on a future date. This risk stems from factors such as price volatility, the use of leverage, margin call obligations, and counterparty exposure. These elements can lead to rapid and significant capital depreciation.
Context ∞ Futures Contract Risk is a recurring topic in cryptocurrency news, especially given the high volatility of digital assets. Analysts frequently discuss how leverage in futures markets can amplify gains but also losses, contributing to sudden market movements. Regulatory bodies are increasingly examining these risks to implement investor protection measures and ensure market stability within the digital asset derivatives space.
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