What Is a Cryptocurrency Perpetual Contract?
A cryptocurrency perpetual contract is a type of futures contract that has no expiration date. This means that a trader can hold a position for as long as they like, without having to worry about the contract expiring.
Perpetual contracts are designed to track the price of the underlying cryptocurrency, and they are traded on a number of different exchanges. They are a popular instrument for traders who want to speculate on the price of cryptocurrencies without having to own the underlying asset.
Glossar
Perpetual Contracts
Mechanism ⎊ Perpetual contracts, fundamentally, represent agreements to buy or sell an asset at a specified future date, differing from traditional futures through the absence of an expiration date; this continuous settlement is achieved via a funding rate, exchanged between long and short positions to anchor the contract price to the underlying spot market.
Cryptocurrency Perpetual Contract
Contract ⎊ A derivative instrument tracking a cryptocurrency asset that possesses no expiration date, distinguishing it from traditional futures.
Funding Rates
Mechanism ⎊ Funding rates, prevalent in perpetual futures contracts across cryptocurrency exchanges, represent a periodic payment exchanged between traders holding long and short positions.
Futures Contract
Leverage ⎊ Futures contracts in cryptocurrency represent agreements to buy or sell an underlying asset at a predetermined price on a future date, functioning as a derivative instrument that allows for amplified exposure without immediate asset ownership.