ETH Perpetual Futures

Definition ∞ ETH perpetual futures are a type of derivative contract that allows traders to speculate on the future price of Ethereum without an expiry date. Unlike traditional futures contracts, perpetual futures do not settle monthly, instead using a funding rate mechanism to keep the contract price aligned with the spot price of Ethereum. This instrument enables continuous leveraged trading on Ethereum’s price movements. It is a popular tool for both speculation and hedging.
Context ∞ News regarding ETH perpetual futures often covers significant shifts in funding rates, large liquidations, or changes in open interest, all of which serve as indicators of market sentiment for Ethereum. High funding rates can suggest strong bullish conviction among traders, while large liquidations may signal market volatility. These futures markets provide crucial data for understanding speculative activity and potential price direction for the second-largest cryptocurrency.