Perpetual trading involves derivative contracts that allow traders to speculate on the future price of an asset without an expiry date, unlike traditional futures contracts. These perpetual futures are common in cryptocurrency markets, enabling continuous leveraged positions on digital assets like Bitcoin or Ether. A funding rate mechanism is typically employed to keep the contract price closely pegged to the underlying spot market price. This form of trading offers high liquidity and flexibility, attracting both retail and institutional participants.
Context
The growth of perpetual trading platforms is a frequent topic in crypto news, often linked to market volatility and the increasing sophistication of digital asset derivatives. Discussions frequently address the risks associated with high leverage and the potential for rapid liquidations to amplify market movements. Regulators worldwide are scrutinizing these products, seeking to establish clear guidelines for investor protection and market integrity. The influence of perpetual trading on overall crypto market dynamics remains a critical area of analysis.
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