Perpetuals

Definition ∞ Perpetuals, or perpetual futures contracts, are derivative instruments that allow traders to speculate on the future price of an asset without an expiration date. They are commonly traded on cryptocurrency exchanges and feature mechanisms like funding rates to maintain alignment with the underlying asset’s spot price. These contracts offer leverage but also carry significant risk.
Context ∞ Perpetual futures are a dominant trading instrument in the cryptocurrency derivatives market, often accounting for a substantial portion of trading volume. News coverage frequently highlights their role in price discovery, market volatility, and the potential for liquidations. Discussions around perpetuals often involve regulatory considerations, the impact of funding rates on market sentiment, and their use in sophisticated trading strategies.