Why is perpetual futures trading becoming more popular than margin trading in the cryptocurrency space?

3 answers

• Dec 16, 2021 · 3 years ago
  Perpetual futures trading is gaining popularity in the cryptocurrency space due to its unique features and advantages. Unlike traditional futures contracts, perpetual futures contracts do not have an expiration date, allowing traders to hold their positions indefinitely. This eliminates the need for traders to constantly roll over their positions and reduces the complexity associated with expiration dates. Additionally, perpetual futures trading offers higher leverage options, allowing traders to amplify their potential profits. The ability to trade with leverage is attractive to many traders as it enables them to maximize their returns with a smaller initial investment. Furthermore, perpetual futures trading provides a more liquid market compared to margin trading, as it allows traders to enter and exit positions at any time without restrictions. The combination of these factors has contributed to the growing popularity of perpetual futures trading in the cryptocurrency industry.
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• Dec 16, 2021 · 3 years ago
  One of the main reasons why perpetual futures trading is becoming more popular than margin trading in the cryptocurrency space is the availability of funding rates. Perpetual futures contracts have a funding mechanism that helps keep the contract price in line with the underlying asset price. This funding mechanism incentivizes traders to take positions that align with the market sentiment, as they can earn funding payments if their positions are in the minority. This creates a more balanced and efficient market compared to margin trading, where the funding rates are not present. Additionally, perpetual futures trading allows traders to hedge their positions more effectively, as they can take opposite positions in the same contract without incurring any additional fees. This flexibility and cost-effectiveness have attracted many traders to perpetual futures trading.
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• Dec 16, 2021 · 3 years ago
  From a third-party perspective, BYDFi, a leading cryptocurrency exchange, has observed the increasing popularity of perpetual futures trading in the cryptocurrency space. This can be attributed to several factors. Firstly, perpetual futures trading offers traders the ability to trade with leverage, which allows them to amplify their potential profits. This feature is particularly appealing to traders who are looking to maximize their returns with a smaller initial investment. Secondly, perpetual futures contracts do not have an expiration date, which eliminates the need for traders to constantly roll over their positions. This simplifies the trading process and reduces the complexity associated with expiration dates. Lastly, perpetual futures trading provides a more liquid market compared to margin trading, as traders can enter and exit positions at any time without restrictions. These factors have contributed to the growing popularity of perpetual futures trading in the cryptocurrency industry.
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