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Perpetual futures Meaning

Perpetual futures is the broader category that encompasses perpetual contracts. While futures have been a staple of traditional markets for decades, the perpetual version was popularized by crypto exchanges to solve the problem of fragmented liquidity. It was specifically designed to accommodate the 24/7 global crypto market where the traditional monthly settlement cycle was seen as too restrictive for retail traders.From a market structure perspective, perpetual futures are synthetic instruments.

When you trade a perp, you aren't actually buying the underlying Bitcoin or Ethereum; you are speculating on the price movement. This is why you can trade with extreme leverage on some platforms; the exchange doesn't need to actually find the Bitcoin for you, it just needs to match your position with someone taking the opposite side of the trade.The funding rate in perpetual futures acts as a market thermometer. When the funding rate is highly positive, it means the majority of the market is bullish, and they are willing to pay the bears to keep their positions open.

This is often a sign of market overheating. Conversely, negative funding means the market is bearish, and the bears are paying the bulls.

Smart traders monitor these rates to gauge market sentiment and to see if the crowd is getting too one-sided.Despite their popularity, perpetual futures have faced regulatory scrutiny globally. Because they allow for extreme leverage, many countries have restricted retail access to these products.

As a result, much of the volume has moved to decentralized perpetual exchanges. These platforms use smart contracts to manage the margin and funding, allowing users to trade directly from their own wallets without needing a central exchange.

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Finery Markets BVI Limited (“Finery Markets”) provides software, technology infrastructure, and related Information and Communication Technology (ICT) services on a Software-as-a-Service (“SaaS”) basis. Finery Markets acts solely as a software vendor and does not operate a trading platform, does not intermediate, match, execute, clear, or settle transactions, and does not engage in any activities that would require regulatory authorisation under applicable laws.

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