Glossary

Perpetual Swap

1 min read

A perpetual swap is an increasingly popular way to trade bitcoin because it allows investors to buy and sell the value of bitcoin without having to own any bitcoin. Perpetual swaps do not expire, do not have a settlement date, do not require any trading of the underlying asset, and are easy to short.

Perpetual swaps closely follow the price of the underlying asset due to the funding rate mechanism, which balances the demand between buyers and sellers of the perpetual swaps so that the price of the swap aligns with that of the underlying asset.

Related Terms
Capital Markets
Capital markets are platforms that facilitate the trading of assets. These markets facilitate the matching of buyers and sellers.
Learn more.
Derivatives
A derivative is a contract that derives its value from the value of the underlying asset. Derivatives allow investors to gain price exposure to an asset without owning it directly.
Learn more.
Exchange
An exchange is an institution which acts as a market-maker between parties who wish to buy and those who wish to sell. Exchanges simply facilitate trades between parties for a fee.
Learn more.
Explore More Terms →