How does the pricing of BTC perpetual futures work?

3 answers

• Muhammad HashirMay 23, 2024 · a year ago
  The pricing of BTC perpetual futures is determined by a combination of factors. These include the spot price of BTC, the funding rate, and the interest rate differential between the two underlying assets. The funding rate is a mechanism that helps keep the perpetual futures price in line with the spot price. It is calculated based on the difference between the contract price and the spot price. If the contract price is higher than the spot price, long positions pay funding to short positions, and vice versa. This helps prevent large deviations between the perpetual futures price and the spot price. Compared to other types of futures contracts, perpetual futures do not have an expiration date, which means they can be held indefinitely. This makes them popular among traders who want to take long-term positions on BTC without worrying about contract expirations.
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• Mohamad MoradJun 01, 2024 · a year ago
  The pricing of BTC perpetual futures is influenced by market demand and supply. If there is high demand for long positions, the price of perpetual futures may be higher than the spot price. On the other hand, if there is high demand for short positions, the price may be lower than the spot price. Additionally, factors such as market sentiment, trading volume, and overall market conditions can also impact the pricing of BTC perpetual futures. It's important to note that the pricing of perpetual futures is dynamic and can change in real-time based on these factors.
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• KT_15Jul 17, 2020 · 5 years ago
  The pricing of BTC perpetual futures is a complex process that involves various factors. One of the key factors is the funding rate, which is calculated every eight hours. The funding rate is determined by the premium or discount of the perpetual futures price compared to the spot price. If the perpetual futures price is higher than the spot price, long positions will pay funding to short positions, and if the perpetual futures price is lower than the spot price, short positions will pay funding to long positions. This mechanism helps maintain the price of perpetual futures in line with the spot price and prevents large deviations. It's worth noting that the funding rate can vary depending on market conditions and can be positive or negative. Traders should keep an eye on the funding rate as it can affect the cost of holding positions in BTC perpetual futures.
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