What are perpetuals and how do they work in the world of cryptocurrency?

6 answers

• Mohammed Affan R ShaikhsurabJan 26, 2024 · a year ago
  Sure! Perpetuals are a type of derivative contract in the cryptocurrency market. They are designed to track the price of an underlying asset, such as Bitcoin or Ethereum, without the need for physical ownership. Unlike traditional futures contracts, perpetuals have no expiration date, hence the name 'perpetual'. They are traded on exchanges and allow traders to speculate on the future price movements of the underlying asset. Perpetuals use a funding mechanism to ensure that the contract's price stays close to the spot price of the underlying asset. This funding mechanism involves the payment of funding rates between long and short positions, which helps to maintain the contract's price in line with the spot market. Overall, perpetuals provide traders with a way to gain exposure to the cryptocurrency market without actually owning the underlying assets.
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• e5gdirq486May 20, 2022 · 3 years ago
  Perpetuals are a popular trading instrument in the world of cryptocurrency. They work by allowing traders to take long or short positions on the price of an underlying asset, such as Bitcoin or Ethereum. Unlike traditional futures contracts, perpetuals do not have an expiration date, which means that traders can hold their positions indefinitely. This makes perpetuals particularly attractive for traders who want to take advantage of short-term price movements in the cryptocurrency market. Additionally, perpetuals often offer leverage, which means that traders can amplify their potential profits (or losses) by borrowing funds to increase their trading position. However, it's important to note that trading perpetuals can be risky, as leverage can also amplify losses. It's crucial for traders to have a solid understanding of the market and risk management strategies before trading perpetuals.
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• Amstrup HonoreSep 09, 2022 · 3 years ago
  Perpetuals are a type of derivative contract that are commonly used in the cryptocurrency market. They are similar to futures contracts, but with a few key differences. Perpetuals do not have an expiration date, which means that traders can hold their positions for as long as they want. Additionally, perpetuals use a funding mechanism to ensure that the contract's price stays in line with the spot price of the underlying asset. This funding mechanism involves the payment of funding rates between long and short positions, which helps to prevent the contract's price from deviating too far from the spot market. Perpetuals are traded on various cryptocurrency exchanges and provide traders with a way to speculate on the price movements of cryptocurrencies without actually owning the assets. It's important to note that trading perpetuals can be complex and carries a high level of risk, so it's crucial to do thorough research and understand the market dynamics before getting involved.
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• Surachai CHAug 16, 2020 · 5 years ago
  Perpetuals are an interesting concept in the world of cryptocurrency. They are derivative contracts that allow traders to speculate on the price movements of an underlying asset without actually owning it. Unlike traditional futures contracts, perpetuals do not have an expiration date, which means that traders can hold their positions for as long as they want. This makes perpetuals a flexible trading instrument for those who want to take advantage of short-term price movements in the cryptocurrency market. Perpetuals are traded on various cryptocurrency exchanges, including Binance, and are subject to market forces such as supply and demand. It's important to note that trading perpetuals can be risky, as the leverage involved can amplify both profits and losses. Therefore, it's crucial to have a solid understanding of the market and risk management strategies before diving into perpetual trading.
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• tako0707Dec 12, 2021 · 4 years ago
  Perpetuals are a type of derivative contract that are commonly used in the cryptocurrency market. They are designed to track the price of an underlying asset, such as Bitcoin or Ethereum, without the need for physical ownership. Perpetuals are similar to futures contracts, but with a few key differences. Firstly, perpetuals do not have an expiration date, which means that traders can hold their positions for as long as they want. Secondly, perpetuals use a funding mechanism to ensure that the contract's price stays close to the spot price of the underlying asset. This funding mechanism involves the payment of funding rates between long and short positions, which helps to maintain the contract's price in line with the spot market. Perpetuals are traded on various cryptocurrency exchanges and provide traders with a way to gain exposure to the cryptocurrency market without actually owning the underlying assets. It's important to note that trading perpetuals can be risky, as leverage is often involved. Therefore, it's crucial to have a solid understanding of the market and risk management strategies before trading perpetuals.
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• code-rutoDec 03, 2022 · 3 years ago
  Perpetuals are a type of derivative contract that are commonly used in the world of cryptocurrency. They allow traders to speculate on the price movements of an underlying asset without actually owning it. Perpetuals are similar to futures contracts, but with a few key differences. Firstly, perpetuals do not have an expiration date, which means that traders can hold their positions for as long as they want. Secondly, perpetuals use a funding mechanism to ensure that the contract's price stays close to the spot price of the underlying asset. This funding mechanism involves the payment of funding rates between long and short positions, which helps to maintain the contract's price in line with the spot market. Perpetuals are traded on various cryptocurrency exchanges and provide traders with a way to gain exposure to the cryptocurrency market without actually owning the underlying assets. However, it's important to note that trading perpetuals can be risky, as leverage is often involved. Therefore, it's crucial to have a solid understanding of the market and risk management strategies before trading perpetuals.
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