By Friday afternoons, the atmosphere on commodity trading desks undergoes a significant shift. For the first four days of the week, traders focus on making profitable bets. However, as the weekend approaches, their attention turns to managing risk. With the rise of perpetual futures contracts in the crypto space, traders can now hedge their positions over the weekend, potentially reducing the 'weekend effect' in traditional markets.
Researchers at Energy Aspects note that the dynamics of short-dated West Texas Intermediate crude options are changing due to the growth of perpetual futures on crypto exchanges. This development allows traders to capture profits over the weekend, rather than simply waiting for markets to reopen. While institutional traders have yet to fully embrace perpetual futures, crypto-native firms, proprietary trading shops, and retail traders are actively trading these instruments. The emergence of perpetual futures is also providing traders with a tool to gauge market direction before traditional markets open.
As the crypto industry continues to influence traditional finance, it remains to be seen whether perpetual futures will reshape the traditional market. Nonetheless, the old habit of waiting over the weekend is slowly changing, and traders are starting to adapt to the new reality of 24/7 trading.