Bitcoin and Ether are seeing their price discovery process move away from spot trading and toward the perpetual futures market, according to a Techub brief citing CoinDesk. The report says perpetual contracts are playing a larger role in setting market prices, reflecting a structural change in how crypto trades around the clock.
Perpetual futures are derivatives contracts with no expiry date. They are typically kept close to spot prices through a funding rate mechanism. As institutional participation rises, liquidity in the perpetual futures market has also improved, giving that market a bigger role in how benchmark crypto prices are formed.
The report also notes that the 24/7 nature of crypto trading is challenging the traditional trading model long associated with Wall Street, where market hours are fixed and price formation has historically centered on spot venues.
Bitcoin and Ether price discovery is shifting from the spot market to the perpetual futures market, according to Techub, citing CoinDesk.
The report says perpetual contracts are exerting a growing influence on price formation, while the around-the-clock nature of crypto trading is challenging the traditional Wall Street trading model.
Perpetual futures are derivatives contracts with no expiry date, and they are typically anchored to spot prices through a funding rate mechanism.
As institutional participation increases, liquidity in the perpetual futures market has improved, and that market is gradually becoming the main venue for crypto price discovery, the report said.
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