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Traders constantly ask whether to keep a position open forever or to roll it over every few months. The answer hinges on the nuances between perpetual futures vs quarterly futures. Both let you bet on crypto price moves without owning the coin, but they differ in expiration, funding, leverage, and risk handling. Below we break down everything you need to know, so you can pick the right contract for your strategy.
What Are Perpetual Futures?
Perpetual Futures are derivative contracts that never expire. As long as you maintain the required margin, you can hold the position indefinitely. The model was popularized by crypto exchanges because the market runs 24/7, giving traders uninterrupted access. To keep the contract price aligned with the spot market, a funding rate is exchanged between long and short positions every eight hours. If you’re long and the funding rate is positive, you pay a fee to shorts; if it’s negative, you receive a payment.
Because there’s no set expiration, you never need to worry about contract rollovers. However, the recurring funding fee can add up, especially for long‑term holders. Perpetual contracts usually settle in stablecoins like USDT, which means your profit or loss is realized in a quote currency rather than the underlying crypto.
What Are Quarterly Futures?
Quarterly Futures are contracts that expire on a fixed schedule - typically the last Friday of March, June, September, and December. The contract’s lifespan is exactly three months from issuance, after which it settles either in cash or in the underlying asset (often Bitcoin). For example, a BTC 0925 quarterly contract expires on September 25, 2025.
The biggest advantage is the absence of funding fees. Instead, traders pay a one‑time margin requirement and the exchange handles the settlement at expiry. Quarterly contracts often use USD pairs rather than USDT, and settlement may be in the base cryptocurrency, giving direct exposure to the asset.
Structural Differences
- Expiration: Perpetual - none; Quarterly - every three months.
- Funding Mechanism: Perpetual - periodic funding fee (every 8 hours); Quarterly - no funding fee.
- Settlement Currency: Perpetual - usually stablecoins (USDT, USDC); Quarterly - often the underlying crypto (BTC, ETH) or USD.
- Rollover Requirement: Perpetual - none; Quarterly - you must close, roll, or settle before expiry.
Cost Comparison
Costs dictate which contract suits a given horizon. Perpetual futures incur two main expenses: the funding fee and the borrowing cost embedded in the margin. Funding rates fluctuate with market sentiment; during bull markets longs typically pay, while in bear markets shorts pay. Over weeks or months these fees can erode a modest profit.
Quarterly futures eliminate the funding fee, making them cheaper for traders who plan to hold positions for weeks or months. However, you still face transaction fees (maker/taker) and a potentially higher initial margin requirement. The net cost difference becomes stark when you compare a three‑month hold: a perpetual position might pay 0.03 % per funding interval (≈0.27 % per day), whereas a quarterly contract pays only the exchange fee once.
Leverage & Margin
Both contract types allow leverage, but perpetual futures often offer higher ratios - sometimes up to 125× on major exchanges. Higher leverage magnifies gains and losses, demanding vigilant margin monitoring. Quarterly futures usually cap leverage lower (e.g., 10×-20×), resulting in larger capital outlay but reduced liquidation risk.
Because perpetual contracts require continuous margin checks every eight hours, a rapid price swing can trigger liquidation sooner than with a quarterly contract that only settles at expiry. Traders who prefer lower risk exposure often gravitate toward quarterly contracts, especially institutional players with stricter capital allocation rules.
Liquidity & Market Participation
Liquidity tends to be split. Perpetual futures dominate day‑trading volume; their 24/7 nature attracts scalpers, day traders, and algorithmic strategies. Quarterly futures, with standardized expiration dates, attract institutional investors, hedgers, and arbitrageurs who value predictable settlement dates and deeper order books on each expiry cycle.
In practice, you’ll see tighter bid‑ask spreads on perpetual contracts during high‑volatility periods, while quarterly contracts often have more consistent depth across the three‑month window. This makes quarterly contracts preferable for large‑size trades that could otherwise move the market.
Risk Management & Rollover Strategies
Managing risk differs sharply. With perpetual futures, the primary active decision is monitoring the funding rate and ensuring you have enough margin to avoid liquidation. You can leave the position open indefinitely, but you must be ready for sudden funding spikes.
Quarterly futures force a decision before expiry: close the position, roll into the next quarter, or let it settle. Rolling involves closing the near‑term contract and opening a new one, often with a “calendar spread” that can be structured to capture the term structure of funding rates. This forced checkpoint can be a discipline advantage, prompting traders to reassess exposure regularly.
Choosing the Right Contract for Your Strategy
Here’s a quick decision matrix:
- Short‑term speculation (minutes to days): Perpetual futures - no expiry, high leverage, instant funding adjustments.
- Medium‑term position (weeks to a few months) with cost sensitivity: Quarterly futures - no funding fee, lower leverage, predictable settlement.
- Hedging a physical or spot holding: Quarterly futures - settlement in the underlying crypto lets you lock in future price.
- Institutional capital with strict risk controls: Quarterly futures - regulated margin, deeper liquidity, no surprise funding.
Ultimately, the choice hinges on how you value funding costs versus the convenience of an endless contract.
Quick Comparison Table
| Feature | Perpetual Futures | Quarterly Futures |
|---|---|---|
| Expiration | No expiration date | Fixed every 3 months |
| Funding Fee | Paid/received every 8 hours | None |
| Typical Settlement | Stablecoin (USDT/USDC) | Underlying crypto (BTC, ETH) or USD |
| Leverage Range | Up to 125× (varies by exchange) | Typically 10-20× |
| Margin Call Frequency | Every 8 hours (funding) | Only at expiry |
| Liquidity Profile | High short‑term, 24/7 | Deep quarterly order books, less volatile |
| Ideal Users | Day traders, scalpers, algo bots | Institutional, hedgers, long‑term position traders |
Common Pitfalls & Pro Tips
- Pitfall: Ignoring funding rates on perpetual contracts. Tip: Monitor the funding tracker; adjust position size when rates spike.
- Pitfall: Forgetting to roll a quarterly contract before expiry. Tip: Set calendar reminders 24 hours before the last trading day.
- Pitfall: Over‑leveraging on perpetual futures. Tip: Use no more than 5× leverage for volatile assets unless you have a tight stop‑loss.
- Pitfall: Assuming settlement currency is always stablecoin. Tip: Verify each contract’s settlement terms; quarterly contracts may settle in BTC, affecting tax treatment.
Frequently Asked Questions
What is the main advantage of perpetual futures?
They let you stay in a position indefinitely without worrying about expiry dates, which is perfect for short‑term trading and algo strategies.
Do quarterly futures have funding fees?
No. Quarterly contracts replace the funding mechanism with a single margin requirement and settle only at expiration.
Can I roll a perpetual contract into a quarterly one?
Yes. Traders often close the perpetual position and open a quarterly contract to lock in a longer horizon while avoiding funding fees.
Which contract type is better for institutional hedging?
Quarterly futures are generally preferred because they provide a predictable settlement date, deeper liquidity, and no ongoing funding cost, aligning with risk‑management frameworks.
How does leverage differ between the two contracts?
Perpetual futures often allow very high leverage (up to 125× on some platforms), while quarterly futures typically cap at 10-20×, reducing liquidation risk.
11 Comments
Lena Novikova
Perpetuals are just a tax scam disguised as trading. Every 8 hours you're paying some algorithm for the 'privilege' of holding. Why not just buy the actual coin and HODL? No fees, no drama. This whole funding rate thing is a casino gimmick.
Olav Hans-Ols
Honestly both have their place. I use quarterly for anything over a week - no surprise fees and I can sleep at night. Perpetuals? Yeah I use 'em for quick scalps but I keep it under 5x leverage. Life’s too short to watch funding rates like a hawk 😅
Kevin Johnston
Perpetuals = freedom 🚀 Quarterly = discipline 💪
Dr. Monica Ellis-Blied
It is critically important to recognize that the structural asymmetry between perpetual and quarterly futures reflects a fundamental misalignment in risk architecture - particularly when leverage is applied without adequate margin buffers. The funding mechanism, while mathematically elegant, incentivizes speculative behavior that is fundamentally incompatible with prudent capital preservation.
Moreover, the normalization of 125x leverage on perpetual contracts is not merely reckless - it is an institutional failure of risk governance. Exchanges that permit such exposure are not facilitating trading; they are facilitating systemic fragility.
Quarterly contracts, by contrast, impose natural discipline: expiration forces accountability. This is not a limitation - it is a safeguard. Institutions use them not because they are ‘conservative,’ but because they are rigorously designed to align with fiduciary duty.
When you ignore funding rates, you are not ‘trading’ - you are gambling with borrowed capital. And in a market where liquidity evaporates in seconds, that is not a strategy - it is a suicide pact.
There is no such thing as ‘free’ leverage. There is only deferred risk - and it always comes due.
Herbert Ruiz
Perpetuals are just for noobs. Everyone who knows anything uses quarterly.
Saurav Deshpande
Ever wonder why funding rates always go positive during bull runs? Coincidence? Or is it a hidden tax to fund the exchange’s buyback program? They make you pay to hold while they quietly accumulate BTC on the quiet. The system is rigged - you're the liquidity pump, they're the silent whale.
Paul Lyman
Yo I just started trading last month and I didn't even know about funding rates till I got liquidated 😅 Now I only do quarterly - no more sleepless nights. Also, I think I spelled ‘funding’ wrong in my notes… whoops.
Frech Patz
Could you clarify the tax implications of settlement in BTC versus USDT for quarterly contracts? Specifically, does settlement in the underlying asset trigger a taxable event in the U.S. under IRS guidelines, even if the position is not closed?
Derajanique Mckinney
why do ppl even use quarterly?? perpetuals are way easier 😴
Rosanna Gulisano
If you're holding past a week you're already doing it wrong
Sheetal Tolambe
I love how this post breaks it down so clearly! I’ve been using quarterly for my long-term positions and it’s been so much calmer. No stress about funding rates at all. Feels more like investing than gambling. Thanks for the clarity 🙏