The Trend of the Year? How Perpetual Contracts are Going Big in 2020

The Trend of the Year? How Perpetual Contracts are Going Big in 2020

Crypto derivatives have been the talk of the crypto world for a while now. Investors, seasoned and otherwise, have been turning to derivatives in their droves, keen to explore how these specialized contracts can generate greater profits while mitigating many of the risks that have become synonymous with cryptocurrency trading.

Several derivatives-specific crypto trading sites now operate - with varying degrees of success and usability, while existing crypto exchanges that in the past only offered the option to trade currencies have expanded to include derivatives in their offerings too.

One study carried out by Deribit found that over 80% of futures traded on its platform in 2019 were perpetual contracts, a trend we see continuing.

In 2020, more and more of these larger, established exchanges have begun to offer users the opportunity to trade perpetual contracts, signalling what is turning out to be one of, if not THE biggest crypto trading trends of the year.

Everyone in the Know Can See the Power of Perpetual Contracts

The latest exchange to reveal that it would now be offering their customers the option to trade perpetual contracts was Huobi.

The well-established cryptocurrency exchange recently revealed that it would be launching the contracts in an effort to help users hedge risk and navigate a volatile marketplace.

"As we've recently experienced, sudden market swings can have a significant yet temporary impact on the broader financial ecosystem, but volatility itself is a very normal part of [the] market cycle," said Ciara Sun, VP of Global Business of Huobi Group in the company’s official press release.

"Perpetual swaps provide traders [with] another tool in their arsenal to capitalize on market movements to create arbitrage."

Huobi is championing perpetual contracts because of their distinctive ability to perform in volatile market conditions.

The exchange is encouraging users to invest in perpetual contracts and exploit the fact that they, unlike other futures contracts, have no expiry date so traders can mitigate the costs associated with rolling over existing futures contract and avoid any potential price manipulation on settlement dates.

Perpetual Contracts Suit Volatile Markets

In the same month (March 2020) both Bybit and KuCoin’s futures platform KuMEX announced that they would both be adding USDT (Tether) perpetual contracts to their existing derivatives offerings.

“USDT Perpetual Contracts will make it clearer and easier for new futures traders to make investment decisions using USDT, and mitigate the volatility brought by non-pegged tokens," said KuCoin Global’s CEO Johnny Lyu.

This move signals yet another wave of support for the offering which is perfectly suited for traders operating in today’s crypto trading space.

Even the world’s largest cryptocurrency exchange, Binance, hasn’t ignored the profitability and power of perpetual contracts and offers its users six different trading pairs to choose from.

The most recent perpetual contract launched on the platform was LTC/USDT that became available to trade in January 2020. Binance users can now trade LTC/USDT, BTC/USDT, ETH/USDT, BCH/USDT, XRP/USDT, and EOS/USD.

The exchange has invested heavily in perpetual contracts this year and is pushing hard for users to adopt them.

Trade Perpetual Contracts on an Exchange Designed for Them

The trend in perpetual contracts may be only just beginning to take off but at C-Trade we have been aware of the power of these contracts since they were first imagined.

We know how they can outperform other offerings in volatile market conditions and that is why we invested in building the infrastructure to offer them from the very beginning, integrating this functionality from day one.

Unlike other exchanges, keen to jump on the perpetual contract bandwagon, here at C-Trade we have always been committed to giving our users the ability to trade these unique offerings.

Look beyond the trend followers and choose C-Trade, a derivatives-focused exchange built by a dedicated team of engineers, mathematicians, and statisticians with over a decade of experience in quantitative trading at some of the world’s leading investment banks and financial institutions.

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