What Are Perpetual Crypto Futures Contracts?

What Are Perpetual Crypto Futures Contracts?

Crypto futures trading is one of the tools offered on large crypto platforms. This financial tool is largely used by experienced users, for it is exceptionally complex and challenging. Let’s talk about the essence of futures crypto trading today.

By trading crypto futures, one can speculate on the potential future value of crypto assets without actually holding them. This is achieved through a contract that stipulates when and for how much an agreed-upon amount of coins will be bought or sold. Let’s take a closer look at how it works.

Crypto futures traders can take “long” or “short” options in regard to the terms of a particular contract:

  • If a trader has taken a “long” position, it means one has purchased a contract claiming that the cost of the chosen asset will go up in the future. When this happens and its value grows, the trader is able to make gains by selling off his contract at profit. This is similar to how one might buy stock with anticipation that its worth will rise later on.
  • Alternatively, when a trader takes on a “short” option one is expecting the cost of the asset to dwindle. If this prediction is correct, then they can buy back the contract at a lower cost and gain profits.

Crypto futures trading requires that each agreement has an expiration date that indicates the termination of the agreement and subsequent exchange of its asset.  When its due date arrives, the contract is settled, meaning that those involved in the agreement exchange their assets at the pre-set price.

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Can I Buy Crypto Futures With No End Date?

Perpetual crypto futures are a special kind of futures agreement that has no end date. These contracts aim to represent the spot market price, which means buyers receive what they buy immediately and with no delays.

Crypto futures agreements that never expire offer investors to take either a long or short position without having any expiry restrictions. These agreements remain open for more extended periods of time and are settled periodically – typically every 8 hours.

To complete this process, perpetual agreements use funding mechanisms. Whether you choose a long or short option in the agreement, you will be required to pay or receive funds from the opposite party based on the difference between the present cost of your contract and that of its corresponding spot market rate.

Perpetual contracts have become all the rage in crypto circles lately, mainly due to their convenience and close relationship with spot markets. Feel free to try the perpetual crypto futures trading instrument on the WhiteBIT crypto exchange platform. 

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Hi, My name is Berry Mathew. I love traveling and exploring new places and I like to share my experience blogging gives me the same opportunity. I have been writing and exploring for years and continue for many more years.