Perpetual futures are the contract that runs the crypto market. On most days they move more money than spot trading, and the total value of open perpetual futures positions on Bitcoin alone stood near 53 billion dollars this week, according to Coinglass. The product exists because its designers removed the one feature that defines a normal futures contract. There is no expiry date. A perpetual future never settles, so you can hold it for an hour or for two years, and nothing on the calendar forces you to close.
That one change is why the format took over. It also created a problem the rest of this guide is about. With no expiry to drag the contract back toward the real price, something else has to do that job, and it does it every few hours.
A future with no delivery date
A traditional futures contract is a promise to buy or sell something at a set price on a set day. Oil, wheat, a stock index, Bitcoin: the shape is the same. When the day arrives, the contract settles and disappears. Traders who want to keep the exposure have to sell the expiring contract and buy the next one, a chore called rolling that costs money and attention.
Perpetual futures delete the calendar. There is nothing to roll and no countdown. Both crypto.news and CryptoSlate describe the same core distinction: a standard future expires on a fixed monthly or quarterly date, while a perpetual contract lets a trader hold indefinitely as long as the margin holds up. For a market that trades every hour of every day, that convenience is the whole appeal.
| Feature | Traditional future | Perpetual future |
|---|---|---|
| Expiry | Fixed date, monthly or quarterly | None |
| Rolling | Required near expiry | Not needed |
| Price anchor | Convergence at settlement | Funding payments every few hours |
| Holding period | Until the contract ends | Open ended |
Funding is the rope tied to spot
Remove the expiry and you remove the mechanism that keeps a future honest. A normal contract cannot drift far from the real price for long, because on settlement day the two must meet. A perpetual has no settlement day. So exchanges built a fee that pushes the contract back toward spot on its own.
That fee is the funding rate, and it usually changes hands every eight hours. The direction depends on which side is crowded. When the perpetual trades above the spot price, the rate turns positive and long positions pay short positions. When it trades below spot, the rate flips and shorts pay longs. Crucially, the money moves between traders, not to the exchange. If too many people crowd the long side and push the contract above spot, holding that long starts to cost a recurring fee, and the pressure nudges the price back down. We covered the mechanics in depth in our piece on how funding rates anchor perpetual contracts to spot.
Read the funding rate as a mood ring for positioning. A high positive number means the crowd is long and paying dearly for it. A negative number means the shorts are the ones bleeding fees. Neither predicts direction on its own, but both tell you where the crowd sits and how much that spot is costing them.
Mark price decides who gets closed out
Here is a subtle piece that catches new traders. The price used to check whether your position survives is not the last price printed on the order book. It is the mark price, a smoothed figure drawn mostly from the wider spot index across several venues.
The reason is protection. On a thin order book, a single large sell order can spike the last traded price down for a second before it snaps back. If that momentary wick decided liquidations, thousands of traders would be wiped out by a flicker that never reflected the real market. By judging positions against the mark price instead, exchanges filter out those spikes. When you calculate how close you are to being closed out, watch the mark price, not the number flashing on the ticker.
Small margin, fast exits
Perpetual futures let a trader control a large position with a small deposit. Put up a tenth of the position as margin and you are trading at ten times your capital. That multiplier cuts both ways, and the danger sits in how little the market has to move before your deposit is gone.
The math is blunt. At ten times, a move of roughly ten percent against you eats the whole margin and the position is closed. At twenty-five times, about four percent does it. At a hundred times, near one percent is enough, which in crypto can happen inside a single volatile minute. Offshore venues have offered fifty to a hundred times for years. Regulated venues in the United States operate under far tighter caps, closer to what other listed futures allow.
When the mark price crosses the level where your losses have swallowed the margin, the position is liquidated automatically and the remaining collateral is taken to close it. This is the same margin machinery we broke down in how a small price move turns into a full loss. The scale is easy to underestimate. On a single softer-than-expected data print last week, 562 million dollars of long positions were liquidated across the market in hours, most of them perpetual futures bets that ran out of room.
From an offshore desk to a CFTC green light
The perpetual swap did not come from a bank. BitMEX built it in 2016, and news.bitcoin.com credits the exchange with inventing the format that now rules its rivals. For most of the decade since, the deepest perpetual futures markets sat offshore, out of reach of United States retail traders and outside the main regulators.
That wall started to crack in 2026. In late May, the CFTC cleared the first United States regulated Bitcoin perpetual futures at Kalshi, a decision CoinDesk and Fortune both reported as the opening of the domestic perp door. Within weeks the venue was pointing to billions in volume. Coinbase has its own perpetual product filing in motion, though as we noted in our report on the Coinbase stock perps filing with no date and no stock list, the details there remain thin. The direction of travel is clear even where the paperwork is not.
Frequently asked questions
Do perpetual futures ever expire?
No. That is the defining trait. A position stays open until you close it or until it is liquidated for running out of margin. The funding rate, paid roughly every eight hours, replaces the expiry as the force keeping the contract near the spot price.
Who receives the funding payment?
Other traders receive it, never the platform itself. When the perpetual trades above spot the rate turns positive and longs pay shorts, and when it slips below the flow reverses toward the longs. The exchange only routes that money between the two sides based on where the contract sits relative to spot.
Why did I get liquidated before the price hit my stop?
Most likely because liquidations run off the mark price, a smoothed index value, rather than the last traded price you were watching. The mark can reach your liquidation level even if the visible ticker has not, especially during a fast move.
Are perpetual futures legal in the United States now?
Some are. The CFTC approved the first regulated Bitcoin perpetual futures in May 2026, and more venues are filing. The caps on position size are much stricter than the offshore standard, and the list of approved products is still short.
Perpetual futures reward traders who understand the forces underneath them: the funding fee that nudges the price back toward spot, the mark price that governs survival, and the margin math that sets how far the market can move before a position ends. Traders who size a position without knowing those three numbers tend to learn about them the hard way, usually during the next fast move.