Spot vs perpetual futures: what’s the difference?

A spot purchase gives you the asset. A perpetual future, often called a perp, gives you long or short exposure to a market without owning the underlying asset. The main differences are ownership, collateral, funding, and the possibility of liquidation.

This guide compares a fully paid Bitcoin purchase with a linear perpetual, whose profit and loss move in proportion to the price change. Borrowed spot positions and contracts settled in the underlying coin have different mechanics.

What do you hold?

When you buy Bitcoin on a spot market, you exchange money or another asset for BTC. If you keep it on a custodial exchange, the exchange holds it for you, subject to its withdrawal rules. If you withdraw it to your own wallet, you control the keys and take responsibility for securing them.

A Bitcoin perpetual position does not give you BTC to withdraw, spend, or transfer. It gives you exposure to changes in the contract's price. Your gains and losses are accounted for in the contract's settlement asset.

The same distinction applies to index perpetuals: they give exposure to a reference index without transferring the assets in its basket.

If the exchange terminology is new, start with What is a perp DEX?.

Spot and perpetuals at a glance

How are perpetuals different from dated futures?

A dated futures contract has an expiry date. If a position is held through settlement, the contract specifies whether it settles in cash or through delivery of the underlying asset. Maintaining exposure beyond expiry generally means closing the expiring position and opening a later-dated contract, known as rolling.

A perpetual has no scheduled expiry, so there is no routine expiry-driven roll. Funding helps align its traded price with a reference price. Keeping the position open still depends on meeting margin requirements, paying any applicable costs, and the market remaining available.

For more on expiring contracts, see CME Group's guide to futures expiration and settlement.

The same Bitcoin exposure, two different trades

Suppose BTC and its perpetual both trade at $100,000. You want exposure equivalent to 0.1 BTC, worth $10,000 at entry. These are hypothetical prices, not current quotes.

With fully paid spot, you spend $10,000 to buy 0.1 BTC. With a linear perpetual, you open a long position equivalent to 0.1 BTC and support it with collateral. Suppose you place $2,000 in an otherwise empty trading account and the venue allows that position. Your starting exposure is five times your account equity: $10,000 divided by $2,000.

Assume the spot and perpetual prices move together, collateral retains its dollar value, and the position remains open. Ignore trading fees, funding, spread, and slippage for this first comparison.

The dollar gain or loss is the same because the exposure is the same. The percentage change relative to the perp account's starting equity is larger because less capital backs that exposure. A 5% price move produces a 25% change in the $2,000 account in this simplified example.

At the same position size, posting less collateral does not increase the dollar profit or loss from a given price move. Leverage lets you take a larger position with a given amount of capital. Using that capacity to increase the position increases both potential gains and losses.

Why a perpetual position can be liquidated

A fully paid spot holding, kept outside borrowing or collateral arrangements, has no maintenance-margin requirement. A fall in BTC's price reduces its value, but does not by itself trigger margin liquidation. That does not remove market, custody, or security risk.

A perpetual account must continue to meet the venue's maintenance-margin requirement. Losses reduce account equity; funding payments, fees, other positions, and changes in collateral value can affect it too. When the account becomes unhealthy, positions may be reduced or closed through liquidation.

In the example above, do not interpret $2,000 of collateral as permission to wait for a $2,000 loss. Liquidation can happen before equity reaches zero. The exact threshold depends on the account and the venue's risk rules; it cannot be inferred from the leverage number alone.

Collateral arrangements matter as well. In a cross-margin account, a losing position can draw on collateral that also supports other positions. Read Cross margin vs isolated margin before treating an order's margin figure as a maximum possible account loss.

Funding changes the cost of holding a position

A conventional perpetual has no scheduled expiry. Funding provides an incentive for its market price to stay near a reference price, although the two can still diverge.

Under the common sign convention, positive funding means longs pay shorts; negative funding means shorts pay longs. Rates can change while you hold the position. Receiving funding at entry does not mean you will keep receiving it.

For a simple illustration, a $10,000 position paying 0.01% for one funding interval incurs $1 of funding: $10,000 × 0.0001. The interval and calculation depend on the venue. This is not an N1 rate quote or a forecast of holding costs.

Fully paid spot has no perpetual funding payment. Both forms of trading can still involve execution fees, spread, and slippage; moving spot assets can also involve withdrawal or network fees. Borrowed spot positions may incur borrowing costs.

Use Funding rates explained for the mechanism, and The all-in cost of a trade to compare costs across entry, holding, and exit.

Long and short mean different things from buying and selling spot

Selling BTC you already own reduces your spot holding. It does not create a position that profits from further falls once you no longer own BTC. Shorting spot usually requires borrowing or another arrangement.

A perpetual can provide short exposure directly through the contract. A short gains from a falling contract price and loses from a rising one, before costs. It still needs collateral and can be liquidated.

A trader might use a short perpetual to offset some price exposure in BTC held elsewhere. That hedge is not a guarantee: spot and perpetual prices can diverge, funding changes, and the short account needs enough collateral to withstand rallies even while the separate spot holding gains value.

What this means on N1

N1's perpetual-market documentation describes contracts with no expiry that are margined and settled in the market's quote token. A perpetual position is exposure to an underlying index, not ownership of the referenced asset.

N1 uses cross-collateralized accounts: eligible token balances support risk across the account's markets. Account health considers collateral, borrows, perpetual positions, profit and loss, funding, and open orders. A spot balance used as collateral can therefore be affected by losses elsewhere in the account. The standalone, fully paid spot example above does not model that arrangement or calculate an N1 liquidation price.

Before placing an order, identify the contract and settlement asset, check the position size, and review the collateral supporting the account. Then check the applicable funding and execution costs. The current market settings and your account state determine what you can trade.

For the exact mechanics, see N1's perpetual-market specification, margining overview, and liquidation documentation.

Common questions

Is a 1x perpetual the same as spot?

No. Even when initial exposure equals account equity, the perpetual still has contract-specific funding, margin, and settlement rules. It does not become an asset you can withdraw as BTC.

Can I hold a perpetual forever?

There is no scheduled expiry, but that is not a guarantee of indefinite access. You must meet margin requirements and account for funding and costs. A venue may also restrict, settle, or delist a market under its rules.