How are perpetual futures contracts different from traditional futures contracts in the context of cryptocurrencies?

1 answers

• ahmad zweinOct 11, 2024 · 8 months ago
  Perpetual futures contracts are a unique type of derivative contract that allows traders to speculate on the price of cryptocurrencies without an expiration date. Unlike traditional futures contracts, perpetual futures contracts do not require traders to roll over their positions periodically. This means that traders can hold their positions for as long as they want, providing them with more flexibility in their trading strategies. Additionally, perpetual futures contracts are settled in cryptocurrency, which eliminates the need for currency conversion and allows for seamless trading. The funding rate mechanism used in perpetual futures contracts ensures that the contract price closely tracks the spot price of the underlying cryptocurrency, providing traders with a fair and transparent trading environment. Overall, perpetual futures contracts offer a more convenient and efficient way to trade cryptocurrencies compared to traditional futures contracts.
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