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.