What are Perpetual Contracts in Crypto Futures?

Those aware of financial instruments used in the traditional market have definitely heard about futures. This is one of the most complex yet profitable trading tools that allows one to speculate on the future value of commodities (this may be grains, gas, oil, precious metals, etc.).

Those engaged in cryptocurrency trading have heard of crypto futures. This is the same speculation on assets’ value, but already in the crypto scope. Digital assets are incredibly volatile, which enables numerous earning opportunities.

What is futures trading crypto? It is a process when a trader tries to forecast crypto prices in the future, making a contract on selling or buying crypto on a pre-determined day. Such agreements are also called “derivative” contracts, and they impose commitments for parties to execute their obligations in a pre-agreed term and at a pre-agreed price.

Advantages of crypto futures trading:

  • risk hedging (picking a crypto futures leverage, a trader comprehends the level of risk one takes);
  • the possibility to earn on the downtrend (opening a “short” position, a trader owes to buy coins at a lower price);
  • using leverage (the opportunity to multiply a trader’s initial amount to receive even bigger profit).

How Do Perpetual Contracts Work?

The WhiteBIT crypto futures platform offers futures contracts that have no end date. That means traders mustn’t buy or sell digital assets on the day of the contract’s expiration, but, depending on their position and the market fluctuations, they pay each other some fee. The funding comes from the exchange’s reserves fund, and the values of digital coins are linked to the spot market price.

The platform offers reduced fees for the first month using futures trading and continuously adds new pairs for this trading method. To learn more about crypto futures, read the WhiteBIT blog.