Crypto futures come in two varieties: perpetual (no expiry) and fixed expiry (typically quarterly or monthly). Both are available to Indian traders on CoinSwitch Pro and other platforms. They look similar but have very different cost structures, risk profiles, and ideal use cases.
This guide explains how each contract works, when each beats the other, and how to choose based on your trading style.
What Are Perpetual Futures? (No Expiry, Ever)
A perpetual future is a derivative contract with no expiry date. You can hold the position indefinitely.
How They Stay Anchored to Spot via Funding Rates
Without an expiry to force convergence, perpetuals use a funding rate mechanism. Every 8 hours (on most exchanges including CoinSwitch Pro), longs pay shorts (or vice versa) based on the gap between the perpetual price and the spot index.
When the perpetual price drifts above spot, longs pay funding to shorts. This penalises the imbalance and nudges the price back toward spot. The reverse happens when the perpetual drifts below spot.
The result: perpetuals stay anchored to spot most of the time, with small recurring funding flows replacing the convergence at expiry.
What Are Fixed Expiry Futures? (Quarterly and Monthly)
A fixed expiry future has a known settlement date. CoinSwitch Pro and other platforms typically offer monthly and quarterly BTC futures.
Automatic Settlement at Expiry: No Funding Cost
The expiry forces convergence. At settlement, the futures price matches spot (or the index defining settlement) and the contract closes.
There is no recurring funding payment. Your cost of carry is built into the entry price as the basis (the spread between futures and spot at the time you enter).
Why Basis Matters More for Fixed Expiry Traders
For a fixed expiry trade, the entry basis defines a substantial part of your P&L. Enter at a 3% premium and you must overcome that 3% just to break even on a long position.
For a short position, the entry basis works in your favour. Selling a 3% premium future means you pocket the 3% if BTC stays flat to expiry.
This is the foundation of basis trading and cash and carry arbitrage.
Side-by-Side Comparison Table
| Feature | Perpetual Futures | Fixed Expiry Futures |
|---|---|---|
| Expiry | None | Monthly or quarterly |
| Cost of carry | Funding rate every 8 hours | Built into entry basis |
| Convergence | Continuous (funding pulls to spot) | Automatic at expiry |
| Capital flexibility | High | Medium |
| Best for | Short-term directional trades | Basis trades, longer-duration views |
| Risk | Funding rate variability | Basis can blow out short-term |
| Tax treatment | Each funding settlement may be VDA event | Single settlement event |
Funding Costs, Settlement, Liquidity, Use Case, Tax
The two contract types differ across every meaningful dimension. Funding versus basis. Continuous versus single-event settlement. Higher flexibility versus higher predictability.
Liquidity is usually deeper on perpetuals (they are the more actively traded product on most exchanges including CoinSwitch Pro). Fixed expiry contracts have thinner books but the spreads are still tight for the most actively traded expiries.
When to Trade Perpetuals (and When Not To)
Match the contract to the trade.
Short-Term Directional Trades: Perpetuals Win
If your trade idea lasts hours to a few days, perpetuals are usually the right choice. Funding cost over short periods is minimal. The flexibility to enter and exit at any size without expiry constraints is valuable.
Day trading and swing trading (under one week) almost always work better on perpetuals.
Long Hold Positions: Funding Drag Adds Up Fast
If you plan to hold a perpetual for several weeks, the funding cost compounds. At 0.01% per 8 hours, a 30-day hold costs roughly 0.9% in funding alone. At 0.03% per 8 hours, the same hold costs 2.7%.
Over months, the funding drag can exceed your expected directional move. Long-duration views typically work better on spot or fixed-expiry futures.
When Fixed Expiry Beats Perpetuals
Fixed expiry contracts shine in specific scenarios.
Cash & Carry Arbitrage Trades
The basis trade (long spot, short quarterly futures) needs a fixed expiry to lock in the convergence profit. Perpetuals introduce funding variability that breaks the deterministic return.
For a cash and carry trader, fixed expiry is the only sensible choice.
Event-Driven Trades with a Known Timeline
If your trade idea aligns with a known event (a halving, a Fed meeting, an earnings season), choose a fixed expiry that covers the event. You pay basis once at entry rather than running funding cost over the whole period.
This is especially useful when funding rates are elevated and basis is reasonable.
Available Contracts on CoinSwitch Pro
CoinSwitch Pro offers perpetual futures on BTC and ETH (with INR settlement available) and at least monthly and quarterly fixed expiry contracts on the major pairs.
Specific contract specifications, tick sizes, and lot sizes change periodically. Check the platform’s contract specs page before placing trades. The trading hours are 24/7 for perpetuals; fixed expiry contracts trade until settlement, which may occur at a specific time UTC on the expiry date.
Key Takeaways
Perpetuals and fixed expiry futures are different tools for different jobs. Perpetuals are flexible, liquid, and well-suited to short-term directional trading. Fixed expiry contracts are predictable, suited to basis trading and event-driven setups, and avoid funding drag.
For Indian crypto traders on CoinSwitch Pro, the practical guidance is straightforward. Short-term trades and small positions: perpetuals. Multi-week views, basis trades, and event setups: fixed expiry. Pick the contract that matches the time horizon and cost structure of your trade, not just the one that is most actively traded.
FAQs
Q: Which type of contract has higher leverage? Leverage is typically similar across both contract types on the same platform (up to 100x on many pairs on CoinSwitch Pro). The cost of using that leverage differs because of funding versus basis.
Q: Can I convert a perpetual to a fixed expiry position? Not directly. You would close the perpetual and open a separate fixed expiry trade. Both close-outs are taxable events.
Q: Why is funding rate variable but basis is fixed at entry? Funding adjusts every 8 hours based on the current imbalance between longs and shorts. Basis is whatever price you negotiate at the time of entry; it then evolves until expiry.
Q: Are fixed expiry futures less liquid than perpetuals? Generally yes. Perpetuals are typically the most actively traded futures product on most exchanges. Fixed expiry liquidity is sufficient for retail trades but thinner for very large positions.
Q: How is each contract taxed in India? Both are VDA transactions under Section 115BBH (conservative interpretation). The 30% flat tax applies on net profits. The 1% TDS applies on gross transaction values. Funding payments may be treated separately by some CAs.
Q: When does a quarterly contract expire? The expiry date is specified in the contract. CoinSwitch Pro publishes the exact settlement date and time. Common cycles are end-of-quarter (March, June, September, December).
Disclaimer: This article is for educational purposes only. It does not constitute investment, financial, tax, or legal advice. Crypto futures and options are high-risk products. Past performance and example calculations are illustrative and not predictive of future returns. Always consult a SEBI-registered investment adviser or a qualified tax professional before trading. INR examples assume hypothetical price levels and may not reflect current market conditions on CoinSwitch Pro.
