Perpetual and Futures* Contracts are popular financial derivatives used in cryptocurrency trading, allowing investors to speculate on digital asset price movements without direct ownership.
*Note - As BIT strives for continuous improvement in this fast-paced crypto environment, please note that we have since ceased offering Futures Contract services
- Definition: Type of cryptocurrency futures contract without an expiration date.
- Settlement: No expiration; perpetual contracts held indefinitely or closed at the trader's discretion.
- Funding Mechanism: Used to maintain alignment with the spot price.
- Use Cases: Leveraged trading, continuous exposure to the market.
- Main Difference: Ongoing contract with no fixed expiration, ideal for leveraged trading.
- Definition: Standardized agreement to buy/sell an asset at a fixed price on a specific future date.
- Expiry Date: Fixed expiration date, requiring eventual settlement.
- Settlement: Physical delivery or cash settlement options.
- Use Cases: Hedging, risk management, and price speculation.
- Main Difference: Fixed expiration date, suitable for time-bound strategies.
- Futures have fixed expiry dates, while perpetual contracts are ongoing without expiration.
- Futures require eventual settlement through physical delivery or cash, while perpetual contracts do not.
- Perpetual contracts use funding mechanisms to align with the spot price and prevent significant deviations.
- Futures are suitable for traditional financial markets and commodities, while perpetual contracts are more widely adopted in the cryptocurrency market.