Here are some of the key differences between BTC futures and perpetual futures:
- Expiration date: BTC futures have an expiration date, while perpetual futures do not. This means that BTC futures contracts must be settled on or before their expiration date, while perpetual futures contracts can be held indefinitely.
- Pricing: BTC futures are typically priced in USD, while perpetual futures are typically priced in USDT (Tether), a stablecoin that is pegged to the US dollar. This means that the price of a BTC perpetual futures contract is typically very close to the spot price of Bitcoin, which is the price at which Bitcoin is currently trading on cryptocurrency exchanges.
- Liquidity: BTC futures are typically more liquid than perpetual futures. This means that there is more trading volume, which can make it easier for traders to enter and exit positions.
- Leverage: BTC futures offer traders the ability to use leverage, which allows them to magnify their profits or losses using a relatively small amount of capital. Perpetual futures also offer traders the ability to use leverage, but the amount of leverage that is available is typically lower than for BTC futures.
- Risk: BTC futures contracts are typically considered to be more risky than perpetual futures contracts. This is because BTC futures contracts have an expiration date, which means that traders are obligated to settle their positions on or before that date. If the price of Bitcoin moves against a trader’s position, they could lose money. Perpetual futures contracts do not have an expiration date, which means that traders are not obligated to settle their positions. However, perpetual futures contracts are still subject to market volatility, which means that traders could lose money if they are not careful.
Overall, BTC futures and perpetual futures are both derivatives that allow traders to speculate on the price of Bitcoin. However, there are some key differences between the two products. BTC futures are typically more liquid and offer traders more leverage, but they also have an expiration date and are considered to be more risky. Perpetual futures do not have an expiration date and are considered to be less risky, but they are typically less liquid and offer traders less leverage.
The best option for a trader will depend on their individual trading style and risk tolerance. Traders who are looking for more liquidity and leverage may prefer BTC futures, while traders who are looking for less risk may prefer perpetual futures.
Shayne Heffernan
