Perpetual contracts trading makes up a significant percentage of overall exchange-traded cryptocurrency volumes. Investors who are looking to bet on the price developments of BTC and other crypto assets are often not too concerned about holding actual tokens but are instead interested in trading highly liquid cryptocurrency derivatives such as perpetual futures contracts.
Perpetual futures contracts on Bitcoin are financial derivatives enabling traders to bet on the price movements of crypto assets using leverage without owning the underlying digital asset.
A futures contract is an agreement between two trading counterparties to buy (or sell) an asset at a specific price at a predetermined date in the future. A perpetual futures contract is effectively the same as a futures contract, with the key difference being that they have no expiry date.
The difference between the perpetual futures price and the price of the underlying asset or reference index is the funding rate. The funding rate is either paid or received, depending on whether you are short or long.
Regardless of the technical variances between trading crypto and perpetual futures, the underlying trading procedure is essentially identical, implying that any trader with a basic understanding of online trading can also trade perpetual Bitcoin contracts. Hope you enjoyed this info and if you want to read the full article on Perpetual Contracts, you can do it here.
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