What are the differences between perpetual bitcoin futures and traditional futures?

1 answers

• smokeflypaperJan 26, 2024 · a year ago
  Perpetual bitcoin futures and traditional futures have some notable differences. Perpetual bitcoin futures are a type of derivative contract that allows traders to speculate on the future price of bitcoin without actually owning the underlying asset. These contracts do not have an expiration date, which means that traders can hold their positions indefinitely. Traditional futures, on the other hand, have a specific expiration date. This means that traders must close their positions before the expiration date or roll them over to a new contract. Another difference is the funding mechanism. Perpetual bitcoin futures use a funding rate to maintain the contract price in line with the spot market. This funding rate is exchanged between long and short positions to ensure the contract price closely tracks the underlying asset. Traditional futures do not have a funding mechanism and are settled at the expiration date. These are some of the main differences between perpetual bitcoin futures and traditional futures.
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