Perpetual Futures Dominate: The Silent Revolution Reshaping Trading in 2025
Wall Street's dinosaurs didn't see this coming—perpetual futures now command over 70% of crypto derivatives volume while traditional finance scrambles to catch up.
The 24/7 leverage machine
No expiry dates. No settlement headaches. Just pure, unfiltered market exposure with up to 100x leverage that's eating traditional futures for breakfast. Retail traders flock to platforms offering zero-fee perpetual swaps as institutional players finally ditch their Bloomberg terminals.
Liquidity tsunami
Daily aggregate open interest smashed $50B last quarter—three times 2021's peak. The secret sauce? Funding rate arbitrage strategies now account for 38% of trading volume, creating a self-reinforcing liquidity loop that makes exit liquidity someone else's problem.
Regulators hate this one trick
CFTC chair reportedly threw his coffee mug when realizing perpetual futures bypass all traditional market safeguards. Meanwhile, crypto natives laugh all the way to the (unlicensed) bank—proving once again that innovation outpaces legislation at 10x leverage.
In search of more freedom and flexibility for traders
In today’s dynamic trading landscape, traders are increasingly seeking greater freedom and flexibility in their investment strategies. This growing demand is driving the need for more Leveraged exposure tools that can offer enhanced opportunities for profit and risk management. As a result, traditional deliverable futures contracts are being overshadowed by perpetual futures, which provide continuous trading and do not have an expiration date. One of the defining characteristics of perpetual futures is their ability to support leveraged trading, allowing traders to capitalize on market movements more effectively. It has made perpetual futures a preferred choice for many modern traders.
With just a small amount of capital, traders can leverage their favorite exposures, which can lead to higher potential returns from both upward and downward price movements. On top of that, perpetual futures are useful instruments for hedging against spot positions or managing portfolio risk without the need to own the underlying asset. Sounds good — and perpetual futures are, in fact, a great tool for experienced traders. Nevertheless, the adoption of perps continues to grow, and novice traders are also trying their hand at this rising trend. This instrument may seem risky to the market, but with good regulation, it can be reasonably SAFE — after all, risks exist in all financial instruments, and they are solvable.
Perps enable brokers to bridge FX, crypto, and CFD markets — broadening their client base. Wider market coverage brings in more traders, and perpetual futures play a crucial role in that. Perps are asset-agnostic, meaning they can embrace forex pairs, cryptocurrencies, commodities, and indices — much like CFDs. As a result, brokers can provide a single platform where clients can trade BTC/USD, EUR/USD, or crypto, all through perpetual contracts. This approach streamlines backend systems and cuts down on fragmentation, making it simpler to onboard a variety of asset classes.
Last but not least, these contracts have been some of the most liquid in the crypto trading universe. They offer less slippage, fast execution, and more flexibility for brokers because these markets are common now. As a result, perpetual futures are rapidly penetrating the TradFi world, where traders can enjoy both unmatched liquidity and speed.
Funding rate mechanisms lead the way
Funding mechanisms are the unsung heroes of perpetual futures. They don’t just keep prices in check; they actively empower traders to manage risk more effectively across volatile and shifting markets. Funding rates align perpetual futures prices with spot prices, preventing extreme divergence. This reduces the risk of holding positions that might otherwise become mispriced over time. Traders can hedge spot positions more accurately, knowing the futures price won’t drift wildly.
When demand skews heavily long or short, funding rates adjust to incentivize the opposite side. This self-correcting mechanism stabilizes open interest and reduces the chance of crowded trades. Traders can use this signal to gauge market sentiment and adjust exposure accordingly. Additionally, it can provide a new trading strategy when the trader trades on the opposite side of the market and receives funding from the traders who trade on the market’s favored side.
In essence, funding mechanisms turn perpetual futures into adaptive instruments that respond to market conditions in real time. They don’t just reflect risk — they help traders navigate and hedge it. Today, markets rely on both manual and automated funding solutions, depending on platform design and market dynamics.
We’re already witnessing signs of the growing acceptance of perpetual futures. For instance, Coinbase and Bitnomial have rolled out regulated perpetual futures in the U.S. under the watchful eye of the CFTC. These contracts are designed for traditional assets, featuring five-year expirations and dynamic funding rates. In this context, the CFTC is actively evaluating perpetual futures for broader approval in the U.S., with several products already available for trading onshore.
Establishing clear cross-border guidelines for perpetual futures across jurisdictions is essential to reducing legal uncertainty. Integrating funding rate mechanisms into existing financial frameworks would be a real breakthrough. In this respect, regulators and clients could do a good job of encouraging banks, hedge funds, and asset managers to use perpetual futures for hedging and speculative strategies.
How perpetual futures go mainstream in 2025
Many factors suggest that this year could become a turning point for perpetual futures, as they MOVE from the edges of the crypto world to mainstream finance. One of the main factors driving this shift is the growing development of clearer cross-border regulations.
More countries are turning to innovative frameworks like the EU’s Markets in Crypto-Assets Regulation to establish clearer rules for issuing and trading digital asset derivatives. In the U.S., the CFTC is closely monitoring crypto derivatives, and regulated exchanges like Bitnomial launched the first U.S. perpetual futures contracts in 2025. On top of that, major traditional exchanges, including the Singapore Exchange (SGX) and Japan’s Osaka Dojima Exchange, are getting ready to roll out Bitcoin (BTC) perpetual futures in 2025, signalling growing comfort among financial authorities with these instruments. This regulatory evolution is giving larger financial players the confidence they need to dive in, paving the way for broader acceptance.
To support broader adoption, much more regulatory clarity and acceptance are needed. Perpetual futures must overcome structural, regulatory, and cultural hurdles to gain traction in traditional finance. That includes clearing mechanisms that ensure counterparty trust and settlement integrity, as well as integration with trading systems used by banks, hedge funds, and asset managers. There should be clear guidelines from bodies like the SEC, CFTC, and ESMA on how perpetual futures are classified and taxed. These also imply the development of certain standardized rules around leverage limits, margin requirements, and funding rate disclosures.
None of this will succeed without proper and innovative risk management tools, i.e., sophisticated risk analytics to handle potentially elevated volatility and leverage. Also, insurance funds and auto-deleveraging systems must be considered to prevent systemic failures during liquidation events. The biggest challenge here is that funding rate mechanisms and perpetual pricing models of perpetual futures are still unfamiliar to TradFi.
At the same time, their ongoing penetration into TradFi is drawing attention from institutional players. As big asset managers and prime brokers delve deeper into digital assets, the benefits of perpetual futures for hedging, leveraging, and smart capital use are becoming crystal clear. For example, companies like Robinhood have expanded their multi-asset offerings to include perpetual futures in both the EU and the U.S., giving retail users access to these sophisticated tools in a regulated setting. Meanwhile, big players like Ripple, Flare, and prime broker Hidden Road are building new financial frameworks designed to improve institutional access to perpetual futures, positioning assets like XRP as a key liquidity layer. This trend is further highlighted by the rise of decentralized perpetual exchanges (DEXs), which offer alternative routes to the market.
Mark Speare is a fintech professional with over eight years of experience in B2B and B2C SaaS, customer success, and trading technology. As Chief Client Officer at B2BROKER, he focuses on enhancing the trading experience through client-centric solutions, scaling business processes, and building strong client relationships to maximise ROI. In the past six years, he has built and scaled five customer success teams, from small units to departments of over 160 professionals. He specialises in transforming client engagement strategies, implementing automation, and optimising workflows to enhance customer satisfaction and retention.
