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

6 answers

• Dodson LaraJun 29, 2021 · 4 years ago
  Perpetual contracts and futures contracts are both popular trading instruments in the cryptocurrency market. Perpetual contracts are a type of derivative contract that have no expiration date, allowing traders to hold positions indefinitely. On the other hand, futures contracts have a specified expiration date. When it comes to funding, perpetual contracts use a funding mechanism to ensure that the contract price closely tracks the spot price of the underlying asset. This funding mechanism is based on the difference between the contract price and the spot price, and it is used to incentivize traders to keep the contract price in line with the spot price. Futures contracts, on the other hand, do not have a funding mechanism and their prices can deviate from the spot price. In terms of trading flexibility, perpetual contracts allow traders to enter and exit positions at any time, while futures contracts have specific settlement dates. Overall, both perpetual and futures contracts have their own advantages and are suitable for different trading strategies.
  1069

  535
• Sergey MaslennikovMay 12, 2021 · 4 years ago
  Alright, let me break it down for you. Perpetual contracts and futures contracts are two types of contracts that you can trade in the cryptocurrency market. The main difference between them is that perpetual contracts don't have an expiration date, while futures contracts do. This means that with perpetual contracts, you can hold your position for as long as you want, whereas with futures contracts, you have to close your position before the expiration date. Another difference is the funding mechanism. Perpetual contracts use a funding mechanism to keep the contract price in line with the spot price of the underlying asset. This means that if the contract price deviates from the spot price, traders will have to pay or receive funding to bring it back in line. Futures contracts, on the other hand, don't have this funding mechanism, so their prices can deviate from the spot price. So, if you're looking for more flexibility and no expiration date, perpetual contracts might be your thing. But if you prefer a fixed expiration date and don't mind the lack of funding mechanism, futures contracts could be a good fit.
  1126

  376
• Nagaraju PreethamDec 12, 2020 · 5 years ago
  Perpetual contracts and futures contracts are two different types of contracts that you can trade in the cryptocurrency market. Perpetual contracts are offered by BYDFi, a leading cryptocurrency exchange. They are derivative contracts that have no expiration date, which means you can hold your position for as long as you want. Perpetual contracts also have a funding mechanism that helps to keep the contract price in line with the spot price of the underlying asset. This funding mechanism ensures that the contract price closely tracks the spot price, which is important for traders who want to hedge their positions or speculate on the price movements of the underlying asset. Futures contracts, on the other hand, are offered by various exchanges and have a specified expiration date. They do not have a funding mechanism and their prices can deviate from the spot price. Both perpetual and futures contracts have their own unique features and are suitable for different trading strategies. It's important to understand the differences between them before deciding which one to trade.
  1090

  273
• damingNov 28, 2022 · 3 years ago
  Perpetual contracts and futures contracts are two types of contracts that you can trade in the cryptocurrency market. Perpetual contracts are derivative contracts that have no expiration date, allowing traders to hold positions indefinitely. They are designed to mimic the spot market and typically have a funding mechanism to keep the contract price in line with the spot price. This funding mechanism is used to incentivize traders to keep the contract price close to the spot price. Futures contracts, on the other hand, have a specified expiration date. They are standardized contracts that require traders to settle their positions on or before the expiration date. Unlike perpetual contracts, futures contracts do not have a funding mechanism and their prices can deviate from the spot price. It's important to note that both perpetual and futures contracts have their own advantages and risks, and traders should carefully consider their trading objectives and risk tolerance before choosing which one to trade.
  1018

  204
• Hejlesen BrodersenOct 23, 2023 · 2 years ago
  Perpetual contracts and futures contracts are two popular types of contracts in the cryptocurrency market. Perpetual contracts are derivative contracts that have no expiration date, which means you can hold your position for as long as you want. They are designed to closely track the spot price of the underlying asset and typically have a funding mechanism to achieve this. This funding mechanism ensures that the contract price stays in line with the spot price, which is important for traders who want to hedge their positions or speculate on the price movements of the underlying asset. Futures contracts, on the other hand, have a specified expiration date. This means that you have to close your position before the expiration date. Futures contracts do not have a funding mechanism, so their prices can deviate from the spot price. Both perpetual and futures contracts have their own advantages and it's up to the individual trader to decide which one suits their trading strategy and risk tolerance.
  1008

  168
• Akmal MaksumovNov 07, 2023 · 2 years ago
  Perpetual contracts and futures contracts are two different types of contracts that you can trade in the cryptocurrency market. Perpetual contracts are derivative contracts that have no expiration date, which means you can hold your position for as long as you want. They are designed to closely track the spot price of the underlying asset and typically have a funding mechanism to achieve this. This funding mechanism ensures that the contract price stays in line with the spot price, which is important for traders who want to hedge their positions or speculate on the price movements of the underlying asset. Futures contracts, on the other hand, have a specified expiration date. This means that you have to close your position before the expiration date. Futures contracts do not have a funding mechanism, so their prices can deviate from the spot price. Both perpetual and futures contracts have their own advantages and it's up to the individual trader to decide which one suits their trading strategy and risk tolerance.
  1029

  147