What is the definition of perpetual contracts in the cryptocurrency market?

3 answers

• Archana BishtMay 28, 2023 · 2 years ago
  Perpetual contracts are a type of derivative product in the cryptocurrency market that allow traders to speculate on the price movements of cryptocurrencies without actually owning the underlying assets. These contracts have no expiration date, hence the term 'perpetual'. They are designed to mimic the experience of spot trading, but with added leverage and the ability to profit from both rising and falling markets. Traders can enter long or short positions, depending on their market expectations. The contracts are settled in the native cryptocurrency of the exchange and typically use a funding mechanism to ensure the contract price stays close to the spot price.
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• Cooper HerreraFeb 10, 2022 · 3 years ago
  Perpetual contracts are like regular futures contracts, but with some key differences. Unlike traditional futures contracts, perpetual contracts do not have an expiration date. This means that traders can hold their positions indefinitely, as long as they have enough margin to cover their losses. Additionally, perpetual contracts use a funding mechanism to maintain the contract price close to the spot price. This funding mechanism ensures that traders who hold long positions pay funding to traders who hold short positions, and vice versa. This helps to prevent the contract price from deviating too much from the spot price.
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• Tran FisherOct 20, 2024 · 9 months ago
  Perpetual contracts are a popular trading instrument in the cryptocurrency market. They allow traders to speculate on the price movements of cryptocurrencies without actually owning them. These contracts have no expiration date, which means that traders can hold their positions for as long as they want. Perpetual contracts also offer leverage, allowing traders to amplify their potential profits or losses. They are settled in the native cryptocurrency of the exchange and are often used for hedging, arbitrage, and speculative trading strategies. Perpetual contracts are available on various cryptocurrency exchanges, including BYDFi, where they are traded with high liquidity and tight spreads.
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