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Exploring The Permanent Futures Contract In Cryptocurrency Markets: Understanding Its Concept, Structure And Validity

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As the cryptocurrency market continues to evolve and expand, so do the opportunities for investors. One of the latest innovations in this space is the permanent futures contract, which offers a new way to trade and invest in cryptocurrencies. In this article, we’ll explore what exactly a permanent futures contract is and how it differs from other trading contracts. We’ll also look at its structure and validity in order to better understand what it can offer investors and traders.


Introduction to Permanent Futures Contracts


Permanent Futures Contracts (PFC) are a type of derivative contract that allows two counterparties to agree to buy or sell an underlying asset at a specified price at some future date. Unlike traditional futures contracts, which expire on a certain date and must be settled in cash, PFCs do not have an expiration date and can be held until the underlying asset is sold or bought.

PFCs were first introduced by the Chicago Mercantile Exchange (CME) in December 2017. Since then, they have become popular among cryptocurrency traders as a way to hedge against price volatility. PFCs are traded on several cryptocurrency exchanges, including BitMEX, Deribit, OKEx and Huobi.

The main advantage of PFCs is that they allow traders to take a long-term view on the market without having to worry about expiry dates. This means that traders can hold a position for as long as they want, without having to worry about the contract expiring worthless.

Another advantage of PFCs is that they offer greater flexibility when it comes to setting the strike price. With traditional futures contracts, the strike price is set at the time of trade and cannot be changed afterwards. With PFCs, however, the strike price can be changed at any time up until the point when the contract is executed.

Lastly, PFCs are more resistant to manipulation than traditional futures contracts because there is no expiry date for them


Understanding the Cryptocurrency Market


In recent years, there has been an explosion in the number of different cryptocurrencies available, with hundreds now on the market.

The cryptocurrency market is still relatively new and therefore can be volatile. Prices can fluctuate wildly from day to day, or even hour to hour.

One of the most important things to understand about the cryptocurrency market is that it is decentralized. There is no one central authority that controls all of the currency.This decentralization has several advantages.

It makes cryptocurrencies less susceptible to government interference or manipulation. It also means that there is no single point of failure for the entire system. If one computer goes down, the others can continue to operate without issue.

Another important thing to understand about cryptocurrencies is that they are not backed by any physical asset. traditional currencies are typically backed by gold or silver reserves. Cryptocurrencies are not backed by anything tangible, which some people see as a disadvantage. Others see it as an advantage, as it means that they are not subject to inflationary pressures like traditional fiat currencies.

One final thing to keep in mind about cryptocurrencies


How Permanent Futures Contracts Work


Permanent futures contracts are a type of financial contract that allows two parties to agree to buy or sell an asset at a future date, at a price agreed upon today. These types of contracts are commonly used in commodities markets, where the price of the underlying asset can be volatile and difficult to predict.

Permanent futures contracts have some key features that make them different from other types of financial contracts. First, they are not exchange-traded like most other futures contracts. This means that they cannot be bought or sold on a centralized exchange.

Second, permanent futures contracts do not have an expiration date. This is because they are meant to be held until the underlying asset is delivered. For example, if you enter into a permanent futures contract to buy gold, you will not receive the gold until you actually deliver the cash to the seller.

Third, permanent futures contracts are often used as a way to hedge against price risk. This is because they allow you to lock in a price for an asset today, even if the price of the asset goes up or down in the future. This can be helpful if you need to sell an asset but are worried about the price changing before you are able to sell it.

Overall, permanent futures contracts can be a helpful tool for managing risk in volatile markets. However, it is important to understand how they work before entering into one.


Advantages and Disadvantages of Permanent Futures Contracts


The permanent futures contract is a type of financial contract that allows two parties to lock in a price for a commodity or asset at some future date. The key feature of this type of contract is that it does not have a set expiry date like standard futures contracts. This means that the contract can be held indefinitely, until one of the parties decides to close out their position.

While the permanent futures contract offers some advantages, there are also some disadvantages to consider before entering into this type of agreement. Below, we outline both the pros and cons of holding a permanent futures contract.



-Locks in a price for an asset, preventing losses if the market price falls

-Can be used as a hedging tool to protect against downside price risk

-Allows traders to take advantage of long-term market trends

-Offers flexibility as it does not have a set expiry date



-Requires more capital than a standard futures contract as it does not expire

-If the market price of the underlying asset rises sharply, traders may be forced to close out their positions at a loss

-May be subject to margin calls if the value of the collateral falls below the required level


Understanding the Legal Validity of Permanent Futures Contracts


When it comes to futures contracts, there is a great deal of discussion about their validity and how they are regulated. In this article, we will explore the concept of the permanent futures contract in cryptocurrency markets and its legal validity.

A futures contract is an agreement between two parties to buy or sell an asset at a predetermined price at a future date. Futures contracts are commonly used in commodities markets, but they can also be used in other markets, including cryptocurrency markets.

The permanent futures contract is a type of futures contract that does not have a delivery date. This means that the contract does not need to be settled on a specific date and can be held indefinitely. The advantage of this type of contract is that it allows for more flexibility and can be used as a tool for hedging or speculation.

However, there is some debate about the legality of permanent futures contracts. While some argue that they are perfectly legal, others contend that they are illegal because they violate the spirit of the Commodity Exchange Act (CEA). The CEA prohibits any contract for future delivery of a commodity unless it is traded on a registered exchange.

The legality of permanent futures contracts will likely continue to be debated as more people become aware of them and start using them in cryptocurrency markets. For now, it is important to understand both sides of the argument before deciding whether or not to use them.




In conclusion, the permanent futures contract offers a unique solution to the challenges facing cryptocurrency traders and exchanges. It allows for deeper liquidity and leverage in crypto markets, while also presenting an efficient way to hedge against risk. Moreover, its structure is transparent and auditable, ensuring that traders are able to understand exactly what they’re getting into before committing funds or entering positions. Ultimately, it has become an important tool in the arsenal of any serious trader looking to get ahead in today’s volatile crypto markets.