What are the differences between perpetual contracts and futures in the cryptocurrency market?

3 answers

• Tronix TechnologiesJan 06, 2025 · 6 months ago
  Perpetual contracts and futures are both popular trading instruments in the cryptocurrency market. Perpetual contracts are a type of derivative that allows traders to speculate on the price of an underlying asset without actually owning it. They have no expiration date and can be held indefinitely. On the other hand, futures contracts are similar to perpetual contracts but have a fixed expiration date. Traders can buy or sell futures contracts with the expectation of profiting from price movements. One advantage of perpetual contracts is that they do not have an expiration date, which allows traders to hold their positions for as long as they want. However, this also means that perpetual contracts can be subject to funding fees, which are used to maintain the contract's price in line with the underlying asset's price. Futures contracts, on the other hand, have a fixed expiration date, which can be beneficial for traders who want to take a longer-term view on the market. However, this also means that traders need to be mindful of the expiration date and roll over their positions if they want to maintain exposure to the market. Overall, the choice between perpetual contracts and futures depends on the trader's trading strategy and preferences.
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• PaperAug 30, 2020 · 5 years ago
  Perpetual contracts and futures are two different types of trading instruments in the cryptocurrency market. Perpetual contracts are designed to mimic the behavior of spot trading, allowing traders to hold positions indefinitely. They are settled in the underlying cryptocurrency and do not have an expiration date. Futures contracts, on the other hand, have a fixed expiration date and are settled in cash. They are often used by traders to hedge their positions or speculate on the future price of an asset. One advantage of perpetual contracts is that they eliminate the need for traders to roll over their positions, as there is no expiration date. However, perpetual contracts may be subject to funding fees, which are used to maintain the contract's price in line with the underlying asset's price. Futures contracts, on the other hand, have a fixed expiration date, which can be beneficial for traders who want to take a longer-term view on the market. However, traders need to be aware of the expiration date and manage their positions accordingly. In conclusion, the choice between perpetual contracts and futures depends on the trader's trading strategy and risk tolerance.
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• Hemant SahuJun 15, 2022 · 3 years ago
  Perpetual contracts and futures are two different types of trading instruments in the cryptocurrency market. Perpetual contracts are similar to futures contracts but do not have an expiration date. This means that traders can hold their positions indefinitely. Perpetual contracts also have a funding mechanism that helps keep the contract's price in line with the underlying asset's price. This funding mechanism can result in positive or negative funding fees, depending on the difference between the contract's price and the underlying asset's price. Futures contracts, on the other hand, have a fixed expiration date and are settled in cash. This means that traders need to be mindful of the expiration date and manage their positions accordingly. One advantage of perpetual contracts is that they allow traders to hold positions for as long as they want without the need to roll over their positions. However, perpetual contracts may be subject to funding fees, which can impact the overall profitability of the trade. Futures contracts, on the other hand, have a fixed expiration date, which can be beneficial for traders who want to take a longer-term view on the market. In conclusion, the choice between perpetual contracts and futures depends on the trader's trading strategy and risk tolerance.
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