For educational purposes only; not investment advice. Crypto assets and leveraged derivatives can cause rapid or total loss.
Direct answer
In a crypto spot trade, the buyer exchanges cash or another asset for the crypto asset itself. In a futures or perpetual contract, the trader takes contractual price exposure instead of buying the underlying asset. A futures position can be long or short, usually uses margin, and may be liquidated if account equity becomes insufficient.
A dated future has an expiration or settlement date. A perpetual contract normally has no fixed expiration and uses a funding mechanism intended to keep its price near a spot reference. Crypto platforms often call both products “contracts,” so the exact specification matters more than the label.
How they differ
| Feature | Spot | Dated futures | Perpetual contract |
|---|---|---|---|
| What is held | The crypto asset or a custodial claim to it | A derivative position | A derivative position |
| Expiration | None | A specified settlement date | Normally none |
| Long and short | Buying creates long exposure; shorting normally requires borrowing or another product | Both are built into the contract | Both are built into the contract |
| Main carrying costs | Trading fees, spread, custody, and any borrowing cost | Trading fees, margin costs, and the cost or benefit of rolling | Trading fees, margin costs, and periodic funding payments |
| Key forced-exit risk | No contract liquidation without borrowing, but the asset can lose most or all of its value | Margin shortfall can trigger liquidation or forced close before settlement | Margin shortfall can trigger liquidation; funding also changes equity |
Spot ownership depends on custody. With self-custody, the buyer controls the asset through its private keys. On a centralized exchange, the customer usually has a contractual claim against the platform until withdrawal, not direct control of on-chain assets. Spot margin is a separate borrowing arrangement and can introduce leverage and liquidation risk.
Dated futures converge through settlement or delivery rules. Some settle in cash rather than delivering crypto, and traders commonly close or roll them before expiration. Perpetuals replace a fixed expiry with product-specific funding payments between long and short positions. Funding encourages convergence but does not guarantee that the contract price equals spot.
Before trading, check the underlying or index, contract size, settlement asset, expiry, margin mode, mark-price and liquidation rules, funding formula, fees, and the legal entity holding collateral. Returns can differ from the spot move because of basis, funding, spread, slippage, fees, and forced execution.
Example
Suppose one trader buys 2,000 USDT of BTC spot with no borrowing. Another posts 2,000 USDT as margin for a 10,000 USDT linear BTC perpetual long, which starts at 5x leverage. If BTC falls 4%, the simplified spot loss is 80 USDT, while the perpetual loss is 400 USDT, or 20% of the posted margin, before fees and funding.
The derivative trader still has the same 10,000 USDT price exposure after the loss, so effective leverage rises as equity falls. Liquidation does not necessarily occur at a 20% margin loss: maintenance margin, mark price, fees, risk tiers, other positions, and collateral rules determine the actual threshold. The spot holder avoids contract liquidation only because the example assumes no borrowing; market, custody, and platform risks remain.
Risks and controls
- Leverage and liquidation: a small adverse move can consume margin quickly. Use position notional, not the platform’s leverage slider alone, to measure exposure.
- Basis and funding: futures and perpetual prices can diverge from spot, and funding can turn an apparently profitable view into a loss.
- Settlement and specification: cash settlement, physical delivery, inverse payoffs, multipliers, and expiry rules produce different outcomes. Read the exact contract.
- Price-source risk: index, mark, last, bid, and ask prices serve different purposes. A position can be liquidated by the mark even when the last trade differs.
- Venue and custody risk: outages, insolvency, withdrawal restrictions, hacks, or rule changes can affect both spot balances and derivative collateral.
- Execution and cost risk: spread, slippage, fees, partial fills, and thin liquidity reduce realized returns. Test order behavior with small size first.
Common misconceptions
- “Spot cannot lose everything.” An unleveraged spot position is not contract-liquidated, but the asset can approach zero and custody can fail.
- “Futures always deliver crypto.” Many crypto futures are cash-settled; settlement depends on the contract specification.
- “Perpetual means cost-free forever.” There is no scheduled expiry, but funding, fees, margin changes, delisting, and liquidation can end or erode the position.
- “5x leverage means profit is automatically multiplied by 5.” For a fixed position size, price exposure determines gross profit and loss; leverage determines how much margin supports it and how close liquidation may be.
Related topics
Sources
- Customer Advisory: Understand the Risks of Virtual Currency Trading - CFTC (accessed: 2026-08-21)
- Futures Market Basics - CFTC (accessed: 2026-08-21)
- Crypto Asset Perpetual Contracts - CFTC (accessed: 2026-08-21)