What are Coinbase perpetual futures?

What Are Coinbase Perpetual Futures?

Coinbase perpetual futures are a type of derivative contract that allows traders to speculate on the future price of cryptocurrencies without owning the underlying asset. Unlike traditional futures, which have an expiry date, perpetual futures do not expire, hence the name. This makes them ideal for traders who want to maintain long or short positions indefinitely. These contracts are settled in US dollars or stablecoins and are designed to track the spot price of assets like Bitcoin (BTC) or Ethereum (ETH) closely. The mechanism that keeps the contract price aligned with the spot price is called the funding rate, which is paid periodically between long and short traders.

How Do Funding Rates Work?

Funding rates are crucial in maintaining price alignment between the perpetual contract and the underlying spot price. When the perpetual futures price is higher than the spot price, the funding rate is positive — meaning long positions pay short positions. When the perpetual price is lower, the funding rate is negative — short positions pay longs.

• Funding occurs every 8 hours on Coinbase, typically at 00:00 UTC, 08:00 UTC, and 16:00 UTC.
• The rate is calculated using the interest rate component and the premium component.
• Traders must monitor the funding rate indicator in the Coinbase Futures interface to anticipate payments. This system discourages extreme divergence between the perpetual and spot markets and ensures fair value alignment without expiration dates.

  How to Trade Perpetual Futures on Coinbase?

  To trade perpetual futures on Coinbase, users must first access the Coinbase Advanced Trade platform (not the standard Coinbase app).
• Navigate to [advanced-trade.coinbase.com](https://advanced-trade.coinbase.com) and sign in.
• Ensure your account is verified for futures trading — this may require completing additional identity checks.
• Deposit funds into your futures wallet (you can transfer from your spot wallet).
• Select the perpetual contract (e.g., BTC-USD-PERP) from the trading pairs list.
• Choose between limit, market, or stop orders depending on your strategy.
• Set your leverage using the leverage slider — options range from 1x to 25x depending on the asset and your risk tolerance. Each step must be completed carefully, as leverage amplifies both gains and losses.

  What Is Leverage and How Does It Affect Risk?

  Leverage allows traders to open positions larger than their account balance. For example, with 10x leverage, a $1,000 deposit can control a $10,000 position. While this increases profit potential, it also increases risk.
• Liquidation occurs when losses exceed your margin — this is automatic and irreversible.
• Coinbase uses a maintenance margin system; if your equity falls below this threshold, liquidation is triggered.
• Higher leverage (e.g., 25x) requires smaller price movements to trigger liquidation compared to 2x or 5x. Traders must understand their liquidation price, visible in the order preview panel, before entering a trade. Risk management tools like stop-loss orders are strongly recommended.

  How Are Positions Closed or Reduced?

  Closing a position can be done manually or automatically.
• To manually close, place an opposite order (e.g., if you’re long 1 BTC, sell 1 BTC to close).
• Partial closures are allowed — for example, reduce a 1 BTC long position by selling 0.5 BTC.
• If liquidation occurs, the position is closed automatically at the market price, and any remaining margin is returned to your wallet.
• Traders can also set take-profit and stop-loss orders to automate exits based on price levels. These tools help manage exposure without constant monitoring, especially during volatile market conditions.

  Frequently Asked Questions

  Q: Can I trade perpetual futures on the standard Coinbase app?No. Perpetual futures are only available on the Coinbase Advanced Trade platform. You must switch to this interface and complete futures-specific verification.

  Q: Is there a minimum balance required to start trading perpetual futures?Yes. Coinbase requires a minimum initial margin to open a position. This varies by asset — for example, BTC-PERP may require as little as 0.001 BTC or its USD equivalent, but leverage and market conditions affect this.

  Q: What happens if I hold a position during a funding rate payment?If you hold a position at the funding timestamp, you will either receive or pay the funding rate based on whether you are long or short and the direction of the rate. This is reflected instantly in your wallet balance.

  Q: Are perpetual futures available for all cryptocurrencies on Coinbase?No. Only select assets like BTC, ETH, SOL, and others have perpetual futures contracts. Check the Advanced Trade platform for the full list of supported pairs.