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

3 answers

• Bonner ArildsenJul 15, 2023 · 3 years ago
  Futures contracts and perpetual contracts are both popular trading instruments in the cryptocurrency market, but they have some key differences. Futures contracts have a specific expiration date, after which the contract is settled. Perpetual contracts, on the other hand, do not have an expiration date and can be held indefinitely. This means that perpetual contracts are more suitable for long-term trading strategies, while futures contracts are better suited for short-term trading. Additionally, perpetual contracts often use a funding rate mechanism to maintain the contract's price close to the spot price, while futures contracts rely on the market forces of supply and demand to determine their price. In terms of trading fees, perpetual contracts usually have a funding fee that is paid by traders who hold positions overnight. This fee is used to maintain the price balance between the perpetual contract and the underlying asset. Futures contracts, on the other hand, typically have a maker and taker fee structure, where traders who provide liquidity to the market (makers) pay lower fees compared to traders who take liquidity from the market (takers). Overall, the choice between futures and perpetual contracts depends on your trading strategy and time horizon. If you're looking for flexibility and the ability to hold positions for an extended period, perpetual contracts may be more suitable. If you prefer shorter-term trading and want to take advantage of price movements within a specific timeframe, futures contracts may be a better option.
  1566

  783
• Newman PurcellOct 17, 2024 · a year ago
  Futures and perpetual contracts are two different types of derivative contracts in the cryptocurrency market. Futures contracts have a fixed expiration date, while perpetual contracts do not. This means that perpetual contracts can be held indefinitely, while futures contracts have a limited lifespan. Additionally, perpetual contracts often use a funding rate mechanism to keep the contract's price in line with the spot price, while futures contracts rely on market forces to determine their price. In terms of trading fees, perpetual contracts usually have a funding fee that is paid by traders who hold positions overnight. This fee is used to maintain the price balance between the perpetual contract and the underlying asset. Futures contracts, on the other hand, typically have a maker and taker fee structure, where makers pay lower fees compared to takers. When it comes to risk management, futures contracts offer more flexibility as they can be used for hedging purposes. Perpetual contracts, on the other hand, are more suitable for traders who want to take long or short positions without worrying about contract expiration. Overall, the choice between futures and perpetual contracts depends on your trading strategy and risk tolerance. If you're looking for a contract with a fixed expiration date and want to use it for hedging purposes, futures contracts may be the better option. If you prefer a contract without an expiration date and want more flexibility in your trading, perpetual contracts may be more suitable.
  1538

  513
• Michael TAug 17, 2022 · 3 years ago
  Futures and perpetual contracts are two popular types of trading instruments in the cryptocurrency market. While they share some similarities, there are also some key differences between them. Futures contracts have a specific expiration date, after which the contract is settled. This means that traders need to carefully consider the expiration date when trading futures contracts. On the other hand, perpetual contracts do not have an expiration date and can be held indefinitely. This makes perpetual contracts more flexible for traders who want to hold positions for a longer period. Another difference is the funding mechanism used in perpetual contracts. Perpetual contracts often use a funding rate to maintain the contract's price close to the spot price. This funding rate is paid by traders who hold positions overnight and helps to balance the contract's price with the underlying asset's price. Futures contracts, on the other hand, rely on the market forces of supply and demand to determine their price. In terms of trading fees, perpetual contracts usually have a funding fee that is paid by traders who hold positions overnight. This fee is used to maintain the price balance between the perpetual contract and the underlying asset. Futures contracts, on the other hand, typically have a maker and taker fee structure, where makers pay lower fees compared to takers. Overall, the choice between futures and perpetual contracts depends on your trading strategy and preferences. If you're looking for a contract with a fixed expiration date and want to take advantage of short-term price movements, futures contracts may be more suitable. If you prefer a contract without an expiration date and want more flexibility in your trading, perpetual contracts may be the better option.
  1798

  450