What is the difference between futures and perpetual contracts in the cryptocurrency market?

3 answers

• Gurneesh BudhirajaApr 04, 2021 · 4 years ago
  Sure! Futures contracts and perpetual contracts are both derivatives that allow traders to speculate on the price movements of cryptocurrencies without owning the underlying assets. However, there are a few key differences between the two. Futures contracts have an expiration date, while perpetual contracts do not. Perpetual contracts also do not require traders to pay or receive the funding rate, which is a mechanism used to keep the contract's price in line with the spot price. Additionally, perpetual contracts often use a funding mechanism to incentivize traders to keep the contract's price close to the spot price. This funding mechanism involves long and short traders paying or receiving funding based on the difference between the contract price and the spot price. Overall, futures contracts are more suitable for short-term trading strategies, while perpetual contracts are better suited for longer-term positions.
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• Jose misael Hidalgo venturaFeb 01, 2022 · 3 years ago
  Alright, here's the deal. Futures contracts and perpetual contracts are both ways to trade cryptocurrencies without actually owning them. The main difference is that futures contracts have an expiration date, while perpetual contracts don't. This means that perpetual contracts can be held indefinitely, while futures contracts have a fixed timeframe. Another difference is the funding rate. Perpetual contracts don't have a funding rate, which is a fee that traders have to pay or receive periodically to keep the contract's price in line with the spot price. Futures contracts, on the other hand, do have a funding rate. So, if you're looking for a contract that you can hold for as long as you want without worrying about expiration dates or funding rates, perpetual contracts are the way to go.
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• Aron SteinJun 22, 2024 · a year ago
  When it comes to futures and perpetual contracts, there are a few key differences you should know about. Futures contracts have an expiration date, which means they have a fixed duration. Perpetual contracts, on the other hand, don't have an expiration date and can be held indefinitely. Another difference is the funding mechanism. Perpetual contracts use a funding mechanism to keep the contract's price in line with the spot price. This funding mechanism involves traders paying or receiving funding based on the difference between the contract price and the spot price. Futures contracts, however, don't have this funding mechanism. So, if you're looking for a contract with more flexibility in terms of duration and don't mind the funding mechanism, perpetual contracts might be a better choice for you.
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