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Picture a trader in the early days of financial markets, somewhere between the 18th and 19th centuries. During this time, traders were engaging in speculative agreements hinging on predictions. Whether it was oils, wheat, or other key commodities, the trader had to anticipate where prices would go in the coming weeks, months, or even years. These deals, known as futures contracts, are agreements to exchange goods at a predetermined price on a future, predetermined date.
The essence of trading during this period was not just understanding current market activity but forecasting potential shifts over time. Futures contracts created a system that allowed forward-looking speculation and provided a mechanism for hedging against price fluctuations.
Today, traders still rely on their intuition and experience to predict price movements but now have access to algorithms, machine learning models, and 24/7, real-time data analytics at the palm of their hands. Despite these significant technical advancements, the tension between risk and reward and the need for timely decision-making remains central to futures trading.
Traditionally, traders have dealt with contract expiration dates and complex rollovers. Now, traders have the option to hold their positions indefinitely, which is where perpetual futures, or “perps,” come into play. In crypto, perpetual futures are a new breed of future contracts, as the absence of a formal end date removes a significant amount of the time-based complexity.
For crypto traders, perpetual futures offer more flexibility, as they can now enter and exit positions as they see fit, holding them to a self-determined timeline.
However, this newfound flexibility doesn’t come without challenges that hinder its use. Despite the sophistication of available crypto trading tools, navigating the market successfully often requires a deep technical and strategic understanding, presenting a steep learning curve for even experienced traders.
For this reason, many investors are still choosing to stick to traditional investment strategies that have served them for decades. However, even though institutional and government interest in crypto is at its peak, many remain cautious about fully embracing the new opportunities that come with it.
This is especially true for institutions, as concerns over proper risk management tools and long-term trading tactics complicate the decision to take an active part in the crypto market.
So what has changed?
As the market shifts, investment managers now have access to more sophisticated platforms with a simplified interface. These platforms, powered by artificial intelligence, leverage advanced technologies that help traders create greater opportunities for return in an easier way.
For instance, recent platform integrations like 3Commas with Coinbase Advanced allow traders to execute both perpetual and spot futures using algorithmic approaches. By providing more flexible trading capabilities, these tools help institutions navigate complex market dynamics with greater precision and confidence.
The integration includes Coinbase Advanced perpetual futures trading, providing asset managers with the ability to explore the potential of perpetual futures and test predictive skills. Additionally, by leveraging artificial intelligence, traders can continuously refine their strategies to achieve desired outcomes.
The financial landscape is growing beyond traditional approaches. To stay competitive in this transformation, institutions must explore alternative investment strategies and adopt tools to deliver greater desired outcomes for their clients. While this shift won’t happen overnight, those who start integrating these changes now will be ahead of the curve. While it might seem foreign at first, adopting this gradual adaptation and embracing new forms of investment opportunities is critical for long-term success.
