Perpetual Derivatives

Definition ∞ Perpetual Derivatives are a type of futures contract in the digital asset market that does not have an expiry date. Unlike traditional futures, these contracts can be held indefinitely, allowing traders to speculate on the future price of an underlying cryptocurrency without the obligation to settle by a specific date. They employ a funding rate mechanism to keep the contract price closely aligned with the spot price of the asset. This financial instrument offers continuous exposure.
Context ∞ Perpetual Derivatives are a prominent feature in crypto news, often associated with high trading volumes and significant market liquidity on digital asset exchanges. Their situation involves enabling sophisticated trading strategies, including leverage and short selling, which can amplify market movements. Discussions often concern the risks associated with these instruments due to their continuous nature and potential for rapid price changes. Regulatory bodies are increasingly scrutinizing their use and oversight.