Perpetual vs Expiring Futures: Funding, Settlement, Basis and Trading Risk

Editorial responsibility: Oliver Sinz · Last verified: October 14, 2026

Perpetual futures and expiring (dated) futures both give you leveraged, margined exposure to bitcoin without holding the coin. The real difference is how each contract stays tied to the underlying over time.

• A dated future has a settlement date and a defined final settlement price. Its price is pulled toward that reference as expiry approaches.
• A perpetual has no settlement date. Exchanges keep it near spot with periodic funding payments between longs and shorts.

That design choice determines who pays to hold a position, when the cost appears, how predictable it is, and what you must do to stay exposed. This guide compares the two structures on settlement, basis, funding, rollover, margin, and cost, then works through a hypothetical 91-day BTC position in each. All prices, rates, and fees in the examples are illustrative assumptions, not market data.

Two ways to anchor a futures price

A dated contract has a last trading day and a final settlement procedure. Before expiry, a holder can offset the position, roll it into a later contract, or let it go to settlement, as CME Group's futures course summarizes.

A perpetual removes the settlement date. A position stays open until the trader closes it or the exchange liquidates it. Funding payments at set intervals keep the contract price near its spot index.

On Binance, for example, the payment equals position notional at mark price times the funding rate, and a positive rate means longs pay shorts (Binance funding FAQ). The default interval is eight hours, but Binance can switch a contract to hourly funding when the rate hits its cap or floor. Intervals, formulas, and caps differ across venues.

Product names do not always match the mechanics. Coinbase Derivatives announced its U.S. "perpetual-style" futures in June 2025 as five-year contracts with funding that accrues hourly and settles twice a day (Coinbase). Those announced terms combined an expiry with funding. For analysis, ask which anchor operates over your holding period: convergence at settlement, funding transfers, or both.

Settlement: what a dated future converges to

Dated futures settle in one of two ways.

Cash settlement. Open positions are closed against a final settlement price, and only the profit or loss changes hands.

• CME: Bitcoin futures (5 BTC per contract) settle against the CME CF Bitcoin Reference Rate (BRR) on the last Friday of the contract month. Trading ends at 4 p.m. London time (CME Rulebook, Chapter 350).
• Bybit: USDT expiry contracts settle at 08:00 UTC at the average index price over the final 30 minutes (Bybit).

Deribit similarly sets its expiry price as a time-weighted average of its index over the last 30 minutes (Deribit).

Physical delivery. The short delivers the asset and the long pays the contract price. This is common in commodities and has been used for bitcoin: ICE Futures U.S. listed physically delivered Bakkt bitcoin futures in 2019 (ICE notice).

Why dated futures converge

On the final day, a cash-settled contract is worth exactly its settlement price, so any premium or discount must disappear by expiry. Before then, traders active in both the future and the underlying keep the futures price connected to the expected settlement value, although frictions can leave large gaps.

Two caveats matter in practice:

1. The contract converges to its settlement reference, not to your spot price. The BRR's one-hour calculation window or a 30-minute index average can differ from where you actually buy or sell spot. For a hedger, that difference is residual basis risk.
2. Convergence is guaranteed only at expiry. Close early and you exit at whatever premium or discount the market prices that day.

Why perpetuals do not

A perpetual has no terminal date, so nothing forces convergence. As He, Manela, Ross, and von Wachter note, perpetuals are not guaranteed to converge to spot at any particular time; funding only creates incentives to narrow the gap. The authors derive theoretical no-arbitrage prices for perpetuals and find crypto deviations from them larger than in traditional currency markets.

Premiums, discounts, and the futures curve

This guide defines basis as futures price minus spot price (F − S). Some sources use the opposite sign, so check the convention before comparing figures.

• A future trading above spot is at a premium; below spot, at a discount.
• When later maturities trade progressively higher, the curve is in contango. When they trade progressively lower, it is in backwardation.

In textbook cost-of-carry terms, a dated premium reflects financing costs net of any benefit from holding the underlying. Crypto curves often depart sharply from that benchmark. A BIS working paper finds crypto carry can exceed 40% a year and varies strongly over time. The authors attribute it mainly to demand for leverage and limited arbitrage capital, not to interest-rate differentials.

A perpetual's premium is a different object: the current gap between the perpetual and its index, managed by funding. It is not a point on a maturity curve, so calling positive funding "contango" conflates two mechanisms.

Funding versus futures carry: related, not identical

Funding and a dated premium both price the same service: leveraged exposure without owning the asset. They deliver that price differently.

1. When it is set. The dated premium is fixed at entry. Held to settlement, the long gives up F₀ − S₀ per coin relative to entry spot, whatever path the price takes. Funding resets every interval and can change sign.
2. How it is paid. The dated premium is not a separate cash flow; it shows up inside price P&L as the contract converges. Funding is an explicit transfer to or from your margin balance.
3. What it is measured on. The dated premium is a fixed amount per coin. Funding is charged on current mark-price notional, so the dollar cost of a given rate grows as price rises.
4. What happens before expiry. A dated position's unrealized P&L moves with spot and the basis. A perpetual's moves with spot and the perpetual premium, plus accumulated funding.

Because the premium is already embedded in the futures price, charging a dated position a separate financing cost would count carry twice. The fair comparison is premium given up versus funding paid or received.

Side-by-side comparison

Worked example: a 91-day long BTC position

The example compares equal exposure (long 1 BTC) over the same horizon: 91 days, ending at the dated contract's expiry. The dated contract is held to settlement.

Hypothetical assumptions:

• Contracts: Linear, quoted, margined, and settled in USDT. P&L is in USDT, which is not identical to U.S. dollars.
• Day 0 prices: BTC index at 100,000. Perpetual entry at 100,000. Dated future entry at 101,500, with 91 days to expiry.
• Entry premium: 1,500 USDT, or 1.5%. That is about 6.0% annualized on a simple 365/91 basis.
• Settlement: The dated contract cash-settles at the 30-minute average index before expiry, as on Bybit. That average is 104,000, and the perpetual is closed at 104,000 at the same time.
• Funding: A constant +0.01% charged at the end of each of 273 eight-hour intervals, including the final timestamp at exit; longs pay. Mark price rises in a straight line from 100,000 to 104,000, which puts average funding notional at about 102,007.
• Trading costs: 0.05% taker fee plus 0.01% estimated spread and slippage per trade. A 0.02% settlement fee applies if the dated future is held to expiry.
• Collateral: 20,000 USDT in isolated margin per position (5× initial leverage on the perpetual, about 5.08× on the dated notional). No margin call or liquidation along the path.

Reading the results

The 1,500 gap in gross P&L is exactly the entry premium. This holds at any terminal price, provided the perpetual exits at the settlement reference. At 90,000, the perpetual's gross P&L would be −10,000 and the dated future's −11,500.

The dated cost was known on day 0; the perpetual's was not. Under these assumptions, net results match at a constant funding rate of about 0.0052% per interval, roughly 5.7% annualized (simple). At that rate, total funding is 1,459.30: the 1,500 premium minus the perpetual's 40.70 of extra trading costs. Small changes in realized funding move the perpetual's result a lot:

Neither column is a forecast. Funding is set interval by interval. The dated premium is set by the market at entry and could be a discount instead, in which case the long would gain from convergence.

Collateral does not change economic P&L. Exposure is about 100,000 USDT of notional whether 20,000 or 50,000 USDT is posted. Leverage changes the return on collateral and the distance to liquidation, not the P&L in USDT.

What changes with an early exit

Suppose both positions are closed on day 45 with spot at 102,000. The perpetual's gross P&L is about 2,000 before funding and costs. The dated future's gross P&L depends on the premium prevailing that day: 500 USDT at a zero premium, 1,265 at 0.75%, or 2,540 at 2.0%. Exiting early also means paying a closing trade instead of a settlement fee. Convergence has not happened yet, so the remaining basis is a live risk, not a known cost.

Keeping exposure past expiry: the roll

Now suppose the trader wants another 91 days of exposure after settlement at 104,000. The perpetual needs no action. The dated position must be re-established in the next contract, either by letting the old one settle and opening the new one, or by trading a calendar spread before expiry that sells the expiring month and buys the next.

The new quarter's premium is set by the market at the time of the roll, not on day 0:

For comparison, second-quarter perpetual funding at a flat 104,000 would be 1,419.60 at an average 0.005% per interval and 2,839.20 at 0.01%. Rolling replaces one continuous unknown (future funding) with a series of unknowns (future calendar spreads), each locked for one period. In backwardation, the same mechanics favor the long.

Margin, collateral, and cash-flow timing

Both structures require initial margin to open and maintenance margin to stay open. Requirements, risk tiers, and margin modes differ by venue and contract, so margin results do not carry over from one exchange to another.

Continuous marking on crypto venues. Offshore venues mark positions continuously. Bybit, for example, sets an expiry contract's mark price as the index adjusted by a two-minute moving average of the contract's basis rate, then switches to the estimated delivery price in the final 30 minutes (Bybit mark price). A shift in the dated basis can therefore change margin even when spot is flat.

Daily marking at CME. CME marks positions to an official daily settlement price, and gains and losses move in cash as variation margin each day (CME).

Funding as a separate margin flow. A long paying perpetual funding loses equity even when prices are flat. On Binance, funding is taken from position margin if the available balance is insufficient, which can move the liquidation price. In a dated contract, carry shows up in price P&L through convergence, which need not be gradual or one-directional before expiry.

Liquidation triggers and insurance-fund rules are exchange-specific and need separate treatment.

Execution and total cost

• Fees and spreads apply on every leg. A dated contract held to settlement avoids an exit trade but may carry a settlement fee; Bybit lists one.
• Liquidity: a venue usually lists one perpetual per underlying and margin asset, which concentrates trading. Dated liquidity is split across maturities, so deferred months can show wider spreads and more slippage, especially for large orders and rolls.
• Roll execution means two legs or a calendar spread order, a spread price, and timing risk. If the old contract settles before the new one opens, exposure lapses briefly.
• Trading hours: offshore venues trade around the clock, and CME launched 24/7 trading in its cryptocurrency futures and options in late May 2026 (CME press release). Comparisons citing restricted hours are out of date for those contracts.
• Collateral opportunity cost applies equally to both, so the example excludes it. Buying spot outright would tie up the full notional.
• Venue and counterparty protections differ between centrally cleared, regulated exchanges and offshore venues.

How the trade-offs map to different objectives

Neither structure is better in general. The relevant trade-offs depend on the position's purpose:

• Fixed horizon: an exposure or hedge ending on a known date lines up with a dated contract's settlement and fixes the carry cost at entry. Residual risks include the settlement-reference gap, the basis at exit if you leave early, margin calls or liquidation before expiry, and venue or counterparty risk.
• Open-ended exposure: a perpetual avoids rolls, but its cost floats. Realized funding can come in above or below the premium a dated contract would have locked in.
• Short hedges: a short perpetual receives funding while rates are positive and pays when they turn negative. A short dated future held to settlement collects any entry premium through convergence but must be rolled to extend.
• Cash-flow sensitivity: funding creates frequent small cash flows. Dated contracts concentrate the economics in price moves, and at CME in daily variation margin.
• Size: large positions face split liquidity when executing and rolling dated contracts.

Assumptions and limitations

The example uses hypothetical prices, a straight-line price path, a perpetual exit exactly at the settlement reference, and assumed fees, and it ignores liquidation risk along the path. Real funding rates, premiums, fee tiers, settlement windows, and margin rules vary by venue and over time. The venue rules cited were checked on the date in this page's metadata. Inverse (coin-margined) contracts settle P&L in the underlying coin and change the arithmetic. Nothing here is a forecast or a recommendation to use either instrument.