What Are Perpetual Futures Contracts? A Plain Explanation
Perpetual futures, offered on Bitval and many other exchanges, are one of the most heavily traded products in crypto, but the name itself confuses people who already know what a traditional futures contract is. Here's what makes them different.
What a Traditional Futures Contract Is
A traditional futures contract is an agreement to buy or sell an asset at a set price on a specific future date. It has a fixed expiry, at which point the contract settles, either through physical delivery of the asset or a cash settlement based on the price difference. Traders who don't want to hold the contract until expiry have to close or roll their position beforehand.
What Makes a Futures Contract "Perpetual"
A perpetual futures contract removes the expiry date entirely. You can hold the position for as long as you want, in theory indefinitely, as long as you maintain the required margin. This is the defining feature: no settlement date forces you to close or roll the position, unlike a traditional futures contract.
How Perpetuals Stay Tied to the Underlying Price
Without an expiry date to force the contract price back in line with the underlying asset's spot price, perpetuals use a different mechanism: funding rates. Periodically, traders on one side of the market (long or short) pay a fee to traders on the other side, based on the difference between the perpetual contract's price and the spot price. This ongoing payment mechanism is what keeps the perpetual contract's price anchored close to the actual market price over time, rather than an expiry date doing that job.
Why Traders Use Perpetuals Instead of Spot
Perpetual futures let traders take leveraged positions, control a larger position size than their capital alone would allow, and go short (profit from a price decline) more directly than most spot markets allow. Bitval offers futures fees separately from spot fees, 0.03% maker and 0.06% taker on futures compared to 0.12% maker and 0.145% taker on spot, reflecting that these are distinct products with different fee structures, not just a variation on spot trading.
The Added Risk Worth Understanding
Because perpetuals typically involve leverage, losses (and gains) are amplified relative to the capital you've committed, and a large enough adverse move can trigger liquidation, an automatic closure of your position to prevent your losses from exceeding your margin. This risk doesn't exist in spot trading the same way, which is why understanding leverage and liquidation matters before trading perpetuals, regardless of which exchange you use.
Once you understand how perpetual futures work, you can create a Bitval account and review the current futures terms directly.
This article is for informational purposes only and does not constitute financial advice. Futures and leveraged trading carry significant risk, including the risk of liquidation, and this guide does not recommend trading any specific asset.
