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Can a Perpetual Swap Trade at a Significant Premium or Discount to the Spot Price?

Yes, but the funding rate mechanism creates a strong arbitrage incentive that usually forces the price back toward the spot level.
Greeks.Live21.11.25

Can a Perpetual Swap Trade at a Significant Premium or Discount to the Spot Price?

Yes, a perpetual swap can trade at a temporary significant premium or discount, especially during periods of extreme market volatility or low liquidity. However, the funding rate mechanism is designed to prevent this deviation from persisting.

A large premium leads to a high positive funding rate, which makes it very expensive for longs and incentivizes shorts/arbitrage, forcing the price back down toward the spot level.

What Is the Typical Frequency for Funding Rate Payments in Perpetual Swap Markets?
How Do Funding Rates in Perpetual Swaps Influence the Market’s Contango or Backwardation State?
In What Scenario Would the Funding Rate for a BTC Perpetual Swap Turn Significantly Negative?
How Can a Trader Use a Negative Funding Rate to Execute a ‘Cash and Carry’ Arbitrage Strategy?

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