What a perpetual actually is
A Bitcoin perpetual future is a contract between you and the exchange that says: "the difference between today's BTC price and the price when this contract closes will be paid in cash." If BTC goes up while you're long, you make money. If it goes down while you're long, you lose. You never touch Bitcoin itself — there's no wallet, no transfer, no on-chain transaction.
What makes it perpetual is that there's no expiry. Traditional futures contracts (the ones traded on CME) expire on a fixed date — March 2026, June 2026, etc. A perp doesn't. It just keeps running until you close the position, or until the exchange liquidates you, whichever comes first.
That sounds simple, and it is. The complication is the two mechanisms that make it work: leverage, which lets you control more BTC than your cash covers, and funding, which keeps the perp price tied to the actual spot Bitcoin price. Both have math attached. Both are where new traders lose money.
Why perpetuals exist at all
Traditional futures expire. Every quarter, the contract you're holding stops existing, and you have to roll it forward to the next quarter — which involves closing the old position and opening a new one, paying spread on both. For long-term traders this is friction. For arbitrageurs and hedgers it's a planning headache.
Perpetuals solve that by simply not expiring. The exchange replaces the expiry mechanic with the funding mechanic — instead of forcing a roll every quarter, it forces a small payment every eight hours that nudges the contract price back toward the spot price. The economic result is similar, but the user experience is much better: you can hold a position for one minute or one year without thinking about contract calendar.
Perpetuals were invented by BitMEX in 2016 and are now the dominant crypto derivatives product — more BTC trades on perpetuals every day than on spot exchanges. If you're trading Bitcoin actively, you're probably trading perpetuals whether you know it or not.
Spot vs futures vs perpetuals
Spot. You buy actual Bitcoin. It lands in your wallet. You can move it, hold it, sell it. The price you pay is the live market price; the only "funding" is whatever the exchange charges in trading fees.
Futures. You buy a contract that says "deliver me X BTC at price Y on date Z." These are typically cash-settled, meaning no actual Bitcoin changes hands — the contract pays the price difference in cash on the expiry date. Traditional futures (CME) work this way.
Perpetuals. Like a future, but no expiry date. The funding rate replaces the contract-roll mechanic. This is what Bybit, Toobit, Binance, OKX, and most other crypto exchanges offer when they say "futures."
From a tax and accounting standpoint, perps are treated as derivatives, not as Bitcoin. From a market-exposure standpoint, they're a very close proxy for Bitcoin — usually within a few basis points of spot. Glimpse's bot trades perpetuals, not spot, because of the leverage and short-selling capability they offer. The track record is built on perpetual contracts.
How funding actually works
Every eight hours on most exchanges (00:00, 08:00, 16:00 UTC), longs and shorts in a perpetual contract exchange a small payment. The funding rate determines who pays whom and how much.
When the perp price is trading above the spot price (longs are aggressive), the funding rate is positive — longs pay shorts. When the perp is trading below spot (shorts are aggressive), funding is negative — shorts pay longs. The size of the payment is the funding rate × your position size.
Typical BTC funding rates are around 0.01% every 8 hours, which annualizes to about 11%. During strong directional moves, funding can spike to 0.1% per 8h (annualized ~110%) or invert sharply negative. Reading funding rate is one of the cleaner sentiment signals in crypto — if everyone is paying to be long, that often marks an excess of bullishness.
Worked example. You're long 1 BTC of perpetual at $90,000. Funding rate is +0.01%. Payment due in 8 hours: 1 BTC × $90,000 × 0.01% = $9. You pay $9 to the shorts. If the rate is 0.05%, you pay $45. Over the course of a high-funding week, these add up.
Glimpse's bot reads funding into its decision-making — extreme funding often correlates with regime shifts. We explain how on the method page.
Leverage — what it actually means
Leverage on a perpetual lets you control a position larger than the collateral in your account. 10× leverage means $1,000 of collateral lets you take a $10,000 BTC position. 25× means the same $1,000 controls $25,000. 100× controls $100,000.
What leverage does NOT do is multiply your gains. It multiplies your exposure, which is the same thing as multiplying your sensitivity to price moves. A 1% move in BTC means a 10% change to a 10×-leveraged account, 25% for 25×, 100% for 100×. Up *and* down.
Worked example. You deposit $1,000, open a 10× long on BTC at $90,000 (total notional position: $10,000, or about 0.111 BTC). BTC moves up 5% to $94,500. Your position is worth $10,500 — you've made $500, a 50% gain on your $1,000 collateral. Now imagine BTC moves down 5% instead, to $85,500. You're down $500, a 50% loss. At 25× leverage, the same 5% move down wipes you out entirely.
Most new traders use too much leverage and find this out experimentally. The avoid liquidation guide walks through how to size positions so this doesn't happen.
How liquidation works
Liquidation is the exchange's way of closing your position when your losses are about to exceed your collateral. The exchange isn't being mean — it's protecting itself from being on the hook for your losses if the market moves further against you.
Every leveraged position has a liquidation price, which is the price at which your collateral would be depleted. At 10× leverage, the liquidation price on a long is roughly 10% below your entry (minus fees and maintenance margin). At 25×, it's about 4% below. At 100×, about 1% below.
When the market hits your liquidation price, the exchange's engine force-closes the position. You lose your entire collateral on that position — the part of it that wasn't already a paper loss. Liquidations on Bybit and Toobit are typically executed by the exchange's matching engine; you don't get a chance to add margin or close it yourself unless you already had a stop-loss set up.
The fix is to use less leverage and to always have a stop-loss above your liquidation price. A stop-loss closes you out at a price *you* picked, at a loss *you* accepted, rather than at the exchange's forced-liquidation price. Glimpse's bot places stop-losses on every position; the rationale is on the method page.
Why funding flips — and what it tells you
Funding flips because crowd positioning flips. When everyone is long and prices are rising, longs are willing to pay shorts a premium to stay in their positions — that's positive funding. When the trend exhausts and shorts pile in, funding can swing strongly negative, with shorts paying longs.
Extreme funding is one of the cleaner contrarian signals in crypto. Funding above 0.05% per 8h (annualized ~55%) usually indicates an excess of leveraged longs, which often precedes a downside flush. Funding below -0.05% indicates leveraged shorts crowding in, which often precedes a short squeeze upward.
These are tendencies, not laws. Funding can stay elevated for days during a strong trend, and the trader who shorts a market just because funding is high (without other confirmation) gets ground down by the trend continuation. Funding is one input, not a strategy. It's one of many inputs the Glimpse engine reads when sizing positions.
Perpetuals vs spot — when each makes sense
Spot Bitcoin makes sense if your time horizon is years, you want self-custody, and you don't need leverage. Buying spot is the simplest way to be long Bitcoin and the one that survives any exchange going down (assuming you withdraw to your own wallet).
Perpetuals make sense if you want to trade both directions (longs and shorts), if you want leverage (carefully), or if you want to express tactical views without committing the full notional amount of capital. Perpetuals are how professionals trade Bitcoin actively.
The same person can do both. Holding spot BTC long-term while running a tactical perpetual book on the side is a common setup — the spot is your conviction position, the perpetual book is your trading book. Just keep the two clearly separated mentally, and don't let losses in the trading book push you to liquidate the conviction position to fund margin calls. That's the move that ends careers.
Glimpse trades exclusively perpetuals. We're a tactical book, not a buy-and-hold position. The exchanges page lists where you can connect, the FAQ covers common questions about how perps fit into a broader portfolio, and pricing breaks down what each tier includes.