Crypto guide
What is a perpetual future in crypto?
A perpetual future, or perp, is a futures contract with no expiry date. It follows the price of a coin such as Bitcoin one for one, and a regular funding payment between longs and shorts keeps its price close to spot. Perps are among the most traded crypto products, used to go long or short with leverage.
- No expiry: held for as long as the margin allows.
- Gains and losses move one for one with the coin.
- Funding keeps its price near spot.
- Leverage magnifies both gains and losses.
| Market | Funding (8h) | Who pays | Basis |
|---|---|---|---|
| BTC | +0.0100% | Longs pay shorts | −0.034% |
| ETH | +0.0088% | Longs pay shorts | −0.061% |
| Gold | +0.0050% | Longs pay shorts | +0.168% |
On a long of 0.01 BTC in the Bitcoin perpetual (about 839 USDT), a funding rate of +0.0100% means paying about 0.084 USDT per funding payment.
Funding as Delta Exchange quotes it on each perpetual. Basis is the perpetual's price against spot.
Questions people ask
What is the difference between a perpetual and an option?
A perpetual gains and loses one for one with Bitcoin, and the loss is limited only by your margin. An option buyer risks only the premium but pays for time. Options can also profit from a quiet market, by selling.
Can a perpetual position be liquidated?
Yes. If losses eat the margin below the exchange's maintenance level, the position is closed. Lower leverage leaves more room.
What is the difference between a perpetual and a normal future?
A normal, dated future expires on a set day and settles then. A perpetual never expires; funding payments do the job that expiry does for a dated future, keeping the price near spot.
Is a perpetual the same as holding Bitcoin?
It moves like Bitcoin, but you hold a contract, not the coin. You can go short as easily as long, you post margin instead of paying the full price, and you pay or receive funding while you hold it.
How much leverage should I use?
As little as lets you sleep. Leverage does not change how far Bitcoin moves; it changes how much of your margin each move takes. A position you can hold through an ordinary day's swing is sized correctly.
Does a perpetual lose value over time like an option?
No. A perpetual has no time decay. Its holding cost is funding, which can be a cost or an income depending on your side and the rate.
Which perpetuals does Algoclear work with?
The Bitcoin, Ethereum and Gold (XAUT) perpetuals on Delta Exchange India, the same three markets as its options. A strategy can hold a perpetual on its own or beside option legs.
Why do option traders use perpetuals?
To hedge. A perpetual can offset the delta of an options position, so small Bitcoin moves barely change its value. Algoclear's strategy builder can preview a delta hedge with the perpetual.
How a perpetual works
You post margin and open a long or a short. From then on the position gains or loses one dollar per Bitcoin for every dollar Bitcoin moves, in your favour or against you, for as long as you hold it. There is no date on which it ends.
Because nothing forces the price back to spot, the exchange uses a funding rate: when the perpetual trades above spot, longs pay shorts, and below spot the reverse. That payment is what anchors a contract that never expires.
Leverage, margin and liquidation, in numbers
An example with round numbers. Bitcoin is at 80,000 and you go long 0.01 BTC, a position worth 800 USDT. At ten times leverage you post 80 USDT of margin.
A 5% fall in Bitcoin takes 40 USDT off the position: half of your margin, on a move Bitcoin can make in a day. A fall of about 10% would take all of it, and the exchange closes the position before that point, at its maintenance margin level. At two times leverage the same 5% fall takes a tenth of your margin.
The move is the same in both cases. Leverage only decides how much of your margin it costs, which is why the size of the position matters more than the direction being right.
Going short, and hedging coins you hold
A perpetual makes a short as simple as a long. Sell 0.01 BTC of the perpetual at 80,000; if Bitcoin falls to 76,000 you make 40 USDT, and if it rises to 84,000 you lose 40.
That is also how a holder hedges. Someone who owns 0.01 BTC and fears a bad week can short 0.01 BTC of the perpetual against it: whatever the coin loses the short gains, so the pair is flat until the short is closed. While funding is positive, the short even collects it.
The other way to protect a holding is a put option. The short perpetual costs little but gives up the upside as well: if Bitcoin rallies, the hedge loses what the coin gains. The put costs a premium and keeps the upside. Which one fits depends on whether you want to be flat, or insured.
Perpetual, dated future or the coin itself
Three ways to hold a view on Bitcoin, side by side.
| Perpetual | Dated future | Holding the coin | |
|---|---|---|---|
| Expiry | None | A set date | None |
| Go short | Yes | Yes | No |
| Leverage | Yes | Yes | No |
| Cost to hold | Funding | Built into the price | None |
| Can be liquidated | Yes | Yes | No |
What holding a perpetual costs
Two things: the trading fee when you open and close, and funding at each payment while the position is open. Funding can also be income: a short receives it when the rate is positive. Over days it is small; over weeks it becomes part of the result, so check it before planning a long hold.
How option traders use perpetuals
Mostly as a hedge. Every options position has a delta: how much it gains or loses as Bitcoin moves. A perpetual has a delta of exactly one per Bitcoin and nothing else, so it can cancel an options position's delta without adding time decay or volatility exposure.
An example: a short strangle has drifted to a position delta of +0.004 BTC after a rally, so it now loses if Bitcoin falls back. Selling 4 lots of the perpetual, 0.001 BTC each, brings the delta back to about zero. The strangle still earns time decay; the perpetual only removes the direction.
Algoclear's strategy builder can preview this delta hedge on the payoff picture before anything is placed.
Risks and common mistakes
A perpetual is simple to open, which is most of its danger.
- Too much leverage. Most perpetual losses are sizing mistakes, not direction mistakes.
- No stop. With a bought option the premium is the stop; a perpetual has none unless you set one.
- Forgetting funding on a long hold.
- Treating a hedge as a trade. A perpetual opened to cancel delta should be closed when the options are closed.
- Trading at any hour without a plan. Bitcoin moves through the night and the weekend, and a leveraged position moves with it.
If a fixed, known worst case matters more to you than one-for-one exposure, compare crypto options vs futures.
Written by the Algoclear team · Updated 22 September 2026 · Examples use Bitcoin options on Delta Exchange India.
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