The traditional Wall Street trading week, punctuated by a Friday afternoon wind-down and a wait-filled weekend, is undergoing a significant transformation. The rise of 24/7 crypto markets has introduced a new paradigm, where traders can now react to global events and market fluctuations in real-time, without being constrained by the limitations of traditional market hours. This shift is being driven by the growing popularity of perpetual futures, or 'perps,' which enable traders to buy and sell contracts that are open indefinitely, with no expiration dates.
As a result, traders are no longer forced to close out their positions on Fridays, only to reopen them on Sundays, and can instead maintain their exposure and adapt to changing market conditions throughout the weekend. According to Mustafa Al Niama, former head of digital assets at Goldman Sachs, 'From about lunchtime on Friday, the desk basically stops thinking about making money and starts thinking about what they can live with for roughly forty-eight hours until the Sunday evening reopen.' However, with the advent of perps, traders can now hedge their exposure and adjust their positions in response to market developments, even when traditional markets are closed.
This has significant implications for the way traders approach risk management and position sizing, particularly in the context of commodities such as oil, where geopolitical events can have a profound impact on prices. The growth of perps trading is also influencing the dynamics of short-dated West Texas Intermediate (WTI) crude options, with researchers at Energy Aspects noting that the implied volatility of these contracts is no longer depressed on Fridays, as traders are now able to hedge their exposure over the weekend. While institutional traders have been slow to adopt perps, due in part to concerns about liquidity and infrastructure, the volume of perps trading has increased significantly in recent months, with decentralized exchanges such as Hyperliquid and centralized exchanges like Binance and Bitget experiencing rapid growth.
As the use of perps continues to expand, it is likely to have a profound impact on the traditional trading landscape, enabling traders to capitalize on new opportunities and manage their risk more effectively, even when the traditional markets are closed.