How Perpetual Futures Control Bitcoin and Ether Prices, and What SpaceX Teaches Us

The process of setting crypto prices is often misunderstood, with many believing it to be driven by spot trading, where buyers and sellers meet on an exchange. However, this has not been the case for years, particularly for bitcoin, ether, and the broader crypto market. Perpetual futures, or 'perps', are contracts that never expire and have become the dominant force in crypto futures trading, accounting for roughly 93% of all crypto futures volume. These contracts are leverage-friendly and can be held indefinitely, with the cost of holding them known as the 'funding rate', which varies daily. Research has shown that perpetual swaps on unregulated venues are the strongest instruments for bitcoin price discovery, with regulated futures and U.S. spot exchanges reacting to, rather than leading, these moves. A study in the Journal of Financial Markets found that perpetual swaps were the primary source of price formation for bitcoin, while other work has identified Binance's perpetual market as the primary source of price formation across the crypto landscape. While the evidence is not conclusive, with some studies finding that spot trading still leads at certain frequencies or during times of stress, the direction of the literature over the past few years has been toward the derivatives market as the place where prices are made. 'Historically, we have seen perps leading mostly during bear market price rallies,' said Julio Moreno, head of research at CryptoQuant. 'For example, Bitcoin perps demand growth led the price rallies of January 2026, and April-May 2026.' The funding rate is a critical component of perpetual futures, as it is the mechanism that keeps the contract price anchored to the underlying spot price. However, it is also a live readout of market sentiment, which is why some traders watch it closely. 'We actually surveyed more than 100 of our traders,' said Hong Yea, co-founder at onchain trading platform Grvt. 'The traders who actually rely on us to hold real conviction positions want predictability there, not another data point to interpret.' The recent SpaceX IPO provides a fascinating example of the power of perpetual futures in price discovery. For about three weeks in May and June, traders on Binance, Coinbase, Hyperliquid, and others were buying and selling exposure to SpaceX through pre-IPO perpetual futures, which were structured to track an implied valuation rather than a share price. The striking part is how accurate these contracts were in predicting the IPO price, with perpetuals on Hyperliquid and Binance quoting the equivalent of roughly $170 a share, well above the $135 set by underwriters. The next day, SPCX opened, ran to an intraday high above $176, and closed its first session at $161, up 19%. The stock printed almost exactly where the perps had it, and a market dominated by leverage-seeking retail traders had read first-day demand more accurately than the banks that spent months building the offering price. However, the perpetual market was blind to the supply side, which ultimately caught up with the market that had predicted it. SPCX has fallen more than 40% from its June peak, dropping from the $135 IPO price to about $115 as of publication, due to the release of locked-up insider shares. This example illustrates what the research says is already true in ordinary crypto trading — the derivatives market is increasingly where price gets discovered, and spot follows.