JPMorgan Questions Institutional Appetite for Crypto Perpetual Futures

JPMorgan says perpetual futures are unlikely to replace traditional derivatives markets because institutional demand remains muted. Based on discussions with clients and market participants, the bank found that the contracts are used primarily for leveraged directional trading rather than hedging real exposure to underlying assets.

The assessment matters because perpetual futures account for roughly 90% of crypto derivatives trading and play a major role in market liquidity and price discovery. Their popularity in crypto, however, has not translated into broad acceptance among institutions, producers or consumers seeking conventional risk-management tools.

Unlike standard futures, perpetual contracts do not expire. They use funding rates to keep their prices close to spot markets, allowing continuous trading without the cost of rolling positions into new contracts. JPMorgan said those advantages are offset for institutional users by basis risk, the absence of a forward term structure and, in many cases, no physical delivery.

The bank also identified clearing protections as a concern for U.S. institutions, particularly with on-chain products. Offshore markets present another potential barrier: JPMorgan cited public Hyperliquid data indicating that about half of perpetual-futures volume was funded by only 12 wallets, raising questions about concentration, depth and scalability.

JPMorgan nevertheless expects perpetuals to retain appeal among retail traders and momentum-based strategies. Their round-the-clock availability, flexible holding periods and embedded leverage remain useful for speculative trading, even if adoption by traditional institutions stays limited.