The Impact of Perpetual Futures on Market Liquidity

The impact of perpetual futures on market liquidity is a multifaceted exploration delving into the dynamic relationship between these derivative instruments and the fluidity of financial markets. Perpetual futures, characterized by their indefinite duration and unique funding mechanism, have emerged as influential tools shaping market dynamics. This analysis navigates through the intricate interplay between perpetual futures trading volumes, price discovery mechanisms, and the overall depth and resilience of market liquidity. Examining how perpetual futures contracts influence market behavior, this study sheds light on their role in enhancing liquidity provision, facilitating risk management strategies, and potentially exacerbating market volatility.