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

5 answers

• Dec 16, 2021 · 3 years ago
  Perpetual contracts and futures are both popular trading instruments in the world of cryptocurrency. Perpetual contracts are a type of derivative contract that allows traders to speculate on the price of an underlying asset without actually owning it. These contracts have no expiration date and can be held indefinitely. On the other hand, futures contracts are also derivative contracts, but they have a fixed expiration date. Traders can buy or sell futures contracts to speculate on the future price of an asset. One key difference between perpetual contracts and futures is that perpetual contracts do not require traders to settle the contract at a specific date, while futures contracts have a settlement date.
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• Dec 16, 2021 · 3 years ago
  Perpetual contracts and futures have different funding mechanisms. Perpetual contracts use a funding rate to ensure that the contract's price closely tracks the spot price of the underlying asset. This funding rate is exchanged between long and short positions to maintain balance in the market. Futures contracts, on the other hand, do not have a funding mechanism. Instead, they rely on the settlement price, which is determined at the expiration date, to determine the profit or loss of the contract.
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• Dec 16, 2021 · 3 years ago
  In the world of cryptocurrency, perpetual contracts are commonly offered by exchanges like BYDFi. These contracts provide traders with the ability to trade with leverage, allowing them to amplify their potential profits or losses. However, it's important to note that trading with leverage also carries higher risks. Futures contracts, on the other hand, are offered by various exchanges and are often used for hedging purposes or for longer-term trading strategies. Traders can choose between perpetual contracts and futures based on their trading goals and risk tolerance.
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• Dec 16, 2021 · 3 years ago
  Perpetual contracts and futures also differ in terms of their pricing structure. Perpetual contracts are typically priced based on the spot price of the underlying asset, with additional factors such as funding rates and funding intervals taken into account. Futures contracts, on the other hand, are priced based on the expected future price of the asset at the expiration date. This difference in pricing can lead to variations in the trading experience and potential profits or losses.
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• Dec 16, 2021 · 3 years ago
  When it comes to trading cryptocurrency, understanding the differences between perpetual contracts and futures is crucial. Perpetual contracts offer flexibility with no expiration date and the ability to trade with leverage, while futures contracts have a fixed expiration date and are often used for hedging or longer-term trading strategies. Both types of contracts have their advantages and disadvantages, so it's important for traders to carefully consider their trading goals and risk tolerance before choosing which contract to trade.
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