What Are Crypto Futures? Dated vs Perpetual Contracts

The CFTC's glossary describes a futures contract as an agreement to buy or sell an asset at a price fixed when the contract is made, with delivery or settlement at a later date. A crypto future applies the same idea to bitcoin, ether or another coin. You do not buy the coin itself: you take one side of a contract whose value moves with the coin's price.

Every contract has two sides. The long gains when the price rises and the short gains when it falls. Because each long is matched by a short, the market as a whole is always balanced in contracts, which is why open interest counts contracts rather than buyers or sellers.

Most crypto futures are cash-settled. The CFTC defines cash settlement as paying the cash value of the underlying instead of delivering it. A bitcoin future settled in dollars or stablecoins never moves any bitcoin between the two sides; only the profit and loss changes hands.

There are two families of crypto futures, and they solve the same problem in different ways: how to keep the contract price tied to the spot price of the coin.

• Dated (expiring) futures have a fixed settlement date, often the end of a month or quarter. On that date the contract settles at a reference price for the coin, so its price is forced to meet spot. Before expiry it can trade above or below spot; that gap is called the basis.
• Perpetual futures have no expiry. Binance's documentation states that perpetual contracts have no expiry date or settlement obligation, so a position can stay open until the trader closes it or it is liquidated. Without an expiry to pull the price back, exchanges use funding: periodic payments between longs and shorts that push the perpetual towards the index price.

Perpetuals dominate crypto trading volume on offshore exchanges because they never need rolling. Dated futures are the standard product on regulated venues such as CME Group, which now lists crypto futures and options for trading around the clock, seven days a week.

To open a futures position you deposit initial margin, which the CFTC describes as funds posted as security that you will meet the contract. The exchange then requires you to keep at least the maintenance margin, the minimum equity that must stay in the account. If losses push your equity below that level, the position is closed or you are asked to add funds.

Leverage is simply the ratio between the position's value and the margin behind it. The CFTC glossary defines it as controlling a large amount of an asset with a comparatively small amount of capital. The price move is the same for everyone; leverage changes how large that move is relative to your margin.

• Illustrative example: a long of 0.1 BTC at 80,000 USDT has a notional value of 8,000 USDT.
• At 5x leverage the initial margin is 8,000 ÷ 5 = 1,600 USDT. A 1% move in bitcoin (80 USDT on this position) is 5% of the margin.
• At 20x the margin is 400 USDT, and the same 1% move is 20% of it. The coin moved by the same amount; only the share of your deposit changed.

Our leverage and liquidation guide shows how far price can move before a position at a given leverage is closed by the exchange.

A futures screen usually shows three prices. The last price is the most recent trade on that contract. The index price is an average of the coin's spot price across several exchanges. The mark price is the exchange's estimate of fair value, built from the index and a smoothed premium.

The distinction matters because exchanges calculate unrealized profit and liquidations from the mark price, not from the last trade. Binance's liquidation rules state that a position is liquidated when the mark price reaches its liquidation price. Using a blended price stops a single spike on one order book from closing everyone's positions at once.

On a perpetual, funding is paid at fixed times. Binance's default schedule is every eight hours, at 00:00, 08:00 and 16:00 UTC, and only positions open at that moment pay or receive. When the rate is positive, longs pay shorts; when it is negative, shorts pay longs. Binance states it does not charge a fee on these payments: the money moves between traders.

A positive rate makes holding a long more expensive while the perpetual trades above the index, which encourages traders to sell it and pulls the price back down. A negative rate works in the opposite direction.

• Illustrative example: the 8,000 USDT long above, at a funding rate of +0.01% per interval, pays 0.80 USDT per interval, 2.40 USDT a day and 72 USDT over 30 days.
• At 1,600 USDT of margin (5x), those 72 USDT are 4.5% of the deposit over a month, before any price move or trading fee.

The funding rates guide explains how the rate is set and where to read it on Coinlytic.

The CFTC defines basis as the difference between the spot price and a futures price. When later-dated contracts trade progressively higher than nearer ones, the market is in contango; when they trade lower, it is in backwardation.

Traders often express the basis as an annualized rate so that contracts with different expiries can be compared.

• Illustrative example: spot bitcoin at 80,000 and a future expiring in 90 days at 81,200 gives a basis of 1,200, or 1.5%.
• Annualized, that is 1.5% × 365 ÷ 90 ≈ 6.1% a year. It describes the premium the market is paying for later delivery, not a return anyone is guaranteed.

Because a dated future must meet spot at settlement, the basis shrinks towards zero as expiry approaches. A perpetual has no such date, which is why it needs funding instead. Our explainer on the bitcoin futures basis looks at what the number says about positioning.

• Liquidation. A leveraged position can be closed by the exchange before your own stop is reached. See how crypto liquidation works for the steps the exchange follows.
• Holding costs. Funding on perpetuals and the basis on dated futures are real costs that accumulate while a position is open.
• Venue differences. Contract sizes, margin tiers, funding formulas and liquidation rules differ between exchanges. A number from one venue cannot be applied to another.
• Platform risk. The CFTC's customer advisory on virtual currencies warns that many platforms are not regulated, that markets can be manipulated and that leverage can lead to losses greater than the amount invested.

• Which contract it is: dated or perpetual, and how it settles.
• The margin mode (isolated or cross), the maintenance margin rate for your position size, and the resulting liquidation price.
• The current funding rate or basis, and what it would cost to hold the position for the time you expect.
• Your stop level, the loss in USDT if it is hit, and whether that loss fits your plan. The position sizing guide works through the arithmetic.

• CFTC: Futures glossary (futures contract, initial and maintenance margin, basis, cash settlement)
• Binance: Introduction to Binance Futures funding rates
• Binance: Futures liquidation protocols
• CME Group: 24/7 crypto futures and options trading
• CFTC: Customer Advisory, Understand the Risks of Virtual Currency Trading