The good and the bad of perps, according to crypto traders
Crypto traders are increasingly relying on perpetual futures, or 'perps,' due to their deep liquidity and lack of expiration dates compared to traditional futures. While these derivatives offer high margin efficiency, traders must account for recurring funding rates that can impact long-term profitability.
Why it matters
Perpetual futures have become the primary financial instrument for crypto market liquidity, making them essential for understanding institutional and retail trading dynamics.
Talk about crypto trading with any savvy trader, and the first thing that comes up these days is perpetual futures, or “perps” — derivatives contracts that allow traders to control a much larger position than the money held in the account. Perps work like standard futures, but with one key advantage: there is no expiry.
While bitcoin and ether traders can dabble in spot, futures, options, perpetual futures and even structured products, for traders of other altcoins, perps are perhaps the only avenue for derivatives available to them. Dated futures (those with expiry) for altcoins are illiquid, and the spot market is an afterthought for anybody who doesn't plan to hold.
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