What is the difference between bitcoin perpetual futures and traditional futures contracts?

3 answers

• Falak ChudasamaDec 24, 2024 · 8 months ago
  Bitcoin perpetual futures and traditional futures contracts are both financial instruments used in the cryptocurrency market, but they have some key differences. Perpetual futures contracts do not have an expiration date, while traditional futures contracts have a fixed expiration date. This means that perpetual futures contracts can be held indefinitely, allowing traders to maintain their positions for as long as they want. On the other hand, traditional futures contracts have a set expiration date, after which the contract is settled. Another difference is the funding mechanism. Perpetual futures contracts use a funding rate to maintain the contract's price close to the underlying asset's spot price. This funding rate is exchanged between long and short positions and helps prevent price manipulation. Traditional futures contracts, on the other hand, are settled through physical delivery or cash settlement at expiration. Overall, the key differences between bitcoin perpetual futures and traditional futures contracts lie in their expiration dates and funding mechanisms.
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• G1nphyFeb 20, 2022 · 3 years ago
  Bitcoin perpetual futures and traditional futures contracts may seem similar, but they have distinct characteristics. Perpetual futures contracts are designed to mimic the spot market, as they do not have an expiration date. This means that traders can hold their positions for as long as they want without worrying about contract settlement. On the other hand, traditional futures contracts have a fixed expiration date, after which the contract is settled. Another difference is the funding mechanism. Perpetual futures contracts use a funding rate to maintain the contract's price close to the underlying asset's spot price. This funding rate is exchanged between long and short positions, ensuring that the contract's price aligns with the market. Traditional futures contracts, however, are settled through physical delivery or cash settlement at expiration. In summary, the main differences between bitcoin perpetual futures and traditional futures contracts are the absence of an expiration date and the funding mechanism used to maintain the contract's price.
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• D22CQDK01-N PHUNG HOANG ANHAug 08, 2020 · 5 years ago
  Bitcoin perpetual futures and traditional futures contracts have some notable differences. Perpetual futures contracts, as the name suggests, do not have an expiration date. This means that traders can hold their positions indefinitely, providing flexibility in their trading strategies. On the other hand, traditional futures contracts have a fixed expiration date, after which the contract is settled. Another difference lies in the funding mechanism. Perpetual futures contracts use a funding rate to ensure that the contract's price closely tracks the underlying asset's spot price. This funding rate is exchanged between long and short positions, preventing price manipulation. Traditional futures contracts, however, are settled through physical delivery or cash settlement at expiration. In conclusion, the key differences between bitcoin perpetual futures and traditional futures contracts are the absence of an expiration date and the funding mechanism used to maintain the contract's price.
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