What is the difference between Bybit perpetual vs futures contracts?

Understanding Perpetual Contracts on Bybit

Perpetual contracts on Bybit are a type of derivative product that allows traders to speculate on the price of an asset without an expiration date. This means that positions can be held indefinitely, provided that margin requirements are met and funding fees are paid. The most distinctive feature of perpetual contracts is the funding rate mechanism, which ensures the contract price stays close to the spot price of the underlying asset. Every 8 hours, traders either pay or receive funding depending on whether the contract trades above or below the spot price.

When trading perpetual contracts, users can go long or short on assets such as Bitcoin, Ethereum, and other major cryptocurrencies. These contracts are typically settled in the quote currency, often USDT or USD. Margin is required to open a position, and leverage can be adjusted based on the user’s risk appetite, with Bybit offering up to 100x leverage on certain pairs. The absence of an expiry date makes perpetuals ideal for traders who want to maintain a position for extended periods without needing to roll over contracts.

How Futures Contracts Work on Bybit

Futures contracts on Bybit are time-bound derivatives that obligate the buyer or seller to transact an asset at a predetermined price on a specified future date. Unlike perpetuals, futures have a fixed expiration, such as quarterly or bi-weekly. Once the contract expires, it is settled automatically based on the final settlement price, and open positions are closed. This makes futures suitable for traders with a specific market outlook within a defined timeframe.

Bybit offers inverse futures and USDT-margined futures, each with different settlement mechanisms. Inverse futures are denominated and settled in the base cryptocurrency (e.g., BTCUSD), while USDT-margined futures use stablecoins for margin and settlement. The leverage available on futures contracts is comparable to perpetuals, but the risk profile differs due to the time constraint. As the expiration date approaches, the futures price converges with the spot price, reducing basis risk.

Key Differences in Funding and Settlement

One of the most critical distinctions between perpetual and futures contracts lies in the funding mechanism. Perpetual contracts implement periodic funding payments every 8 hours to align the contract price with the underlying spot price. If the perpetual trades above spot, longs pay shorts; if below, shorts pay longs. This system prevents long-term divergence between contract and spot prices.

Futures contracts do not have funding fees. Instead, they converge naturally toward the spot price as expiration nears. Settlement occurs at expiry using a mark price derived from the average spot price over a defined period. For inverse futures, settlement is in BTC or ETH; for linear futures, it’s in USDT. This absence of recurring funding makes futures more predictable for traders who prefer to avoid ongoing costs.

Trading Strategies and Use Cases

Traders often choose perpetual contracts for long-term directional bets or hedging positions where timing is not critical. The ability to hold positions indefinitely allows for strategies like trend following or carry trades, especially when funding rates are favorable (e.g., receiving payments as a short in a contango market).

Futures contracts are better suited for event-driven trading, such as positioning ahead of macroeconomic announcements, halvings, or quarterly earnings in traditional markets. Traders can also engage in calendar spreads by simultaneously holding futures with different expiry dates to profit from price discrepancies. The fixed expiry enables precise risk management, as the trade lifecycle is clearly defined.

Operational Differences in Position Management

Managing a perpetual contract on Bybit involves monitoring funding timestamps and ensuring sufficient margin to cover potential funding deductions. To set up a perpetual trade:

• Log in to your Bybit account and navigate to the Derivatives section.
• Select either USDT Perpetual or Inverse Perpetual.
• Choose the trading pair (e.g., BTC/USDT).
• Set your leverage using the slider or input field.
• Decide between Isolated or Cross margin mode.
• Place a limit or market order for long or short.
• Monitor the funding countdown in the position panel.

For futures contracts, the process is similar, but attention must be paid to the expiry date:

• Go to the Futures tab in Derivatives.
• Select USDT Futures or Inverse Futures.
• Pick a contract with a specific expiry (e.g., BTCUSD 30DEC22).
• Adjust leverage and margin mode.
• Enter your order.
• Track the time to expiry and settlement price trends.

Closing a futures position before expiry avoids automatic settlement, while perpetuals can be closed at any time without time pressure.

Risk and Margin Considerations

Both contract types require initial margin and are subject to liquidation if the price moves against the position beyond the maintenance margin threshold. However, perpetual contracts expose traders to ongoing funding risk—a long position in a high-funding environment can erode profits over time. Conversely, futures eliminate this variable but introduce rollover risk if a trader wishes to maintain exposure beyond expiry.

Bybit’s liquidation engine uses an insurance fund and auto-deleveraging system to manage extreme market conditions. Traders should set stop-loss orders and monitor mark price to avoid liquidation due to price spikes. The margin ratio is displayed in real-time, and alerts can be configured for risk thresholds.

Frequently Asked Questions

Can I switch from a perpetual to a futures contract on the same asset?Yes, you can hold both types of contracts simultaneously. However, they operate independently. You must close the perpetual position manually and open a new futures position. There is no direct conversion mechanism on Bybit.

How often are funding fees charged on Bybit perpetuals?Funding fees are exchanged every 8 hours, specifically at 00:00 UTC, 08:00 UTC, and 16:00 UTC. The fee amount depends on the prevailing funding rate and your position size and direction.

What happens if I hold a futures contract until expiry?The contract will be automatically settled based on the final settlement price, which is calculated using the average spot price over a 30-minute window before expiry. Your PnL will be realized in the settlement currency (BTC, ETH, or USDT).

Are there fees for closing a perpetual or futures position early?Bybit does not charge additional fees for early closure. Trading fees are based on maker/taker rates and are applied when the order is executed, regardless of when the position is closed.