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

4 answers

• ranwMay 23, 2024 · a year ago
  Perpetual futures contracts are a type of derivative that allows traders to speculate on the price of cryptocurrencies without actually owning the underlying asset. Unlike traditional futures contracts, perpetual futures contracts do not have an expiration date. They are designed to mimic the spot market and are settled daily. This means that traders can hold their positions indefinitely as long as they have enough margin to cover their losses. Traditional futures contracts, on the other hand, have a fixed expiration date and require physical or cash settlement at that time.
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• Jessen MullinsJan 24, 2021 · 4 years ago
  Perpetual futures contracts are often preferred by traders who want to have more flexibility in their trading strategies. Since there is no expiration date, traders can hold their positions for as long as they want, allowing them to take advantage of long-term price trends. Traditional futures contracts, on the other hand, are better suited for short-term trading and hedging purposes. They provide a fixed timeframe for traders to execute their trades and manage their risk.
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• Jorge Alberto Flores CruzFeb 22, 2022 · 3 years ago
  Perpetual futures contracts have gained popularity in the cryptocurrency sector due to their unique funding mechanism. In perpetual futures trading, traders pay or receive funding based on the difference between the contract price and the spot price. This funding mechanism helps to keep the perpetual futures price in line with the spot price and prevents large deviations. BYDFi, a leading cryptocurrency exchange, offers perpetual futures contracts with competitive funding rates and deep liquidity, making it a popular choice among traders.
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• chikiryauxgodMar 31, 2025 · 3 months ago
  When comparing perpetual futures and traditional futures contracts, it's important to consider the funding costs. Perpetual futures contracts typically have a funding rate that is determined by the market demand for long or short positions. This funding rate is paid or received by traders every few hours. Traditional futures contracts, on the other hand, do not have a funding mechanism. Instead, traders may need to pay a commission or spread when entering or exiting their positions. It's important for traders to consider these costs when choosing between perpetual futures and traditional futures contracts.
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