The traditional Friday afternoon mindset on commodity trading desks is shifting, as traders are no longer limited by the constraints of weekend market closures. With the rise of perpetual futures contracts on crypto exchanges, traders can now hedge their bets and adjust their positions 24/7, reducing their reliance on waiting for markets to reopen on Sunday evenings. According to Mustafa Al Niama, former head of digital assets at Goldman Sachs, 'from about lunchtime, 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.' This change in mindset is being driven by the growing popularity of perpetual futures contracts, which allow traders to buy and sell contracts with no expiration date, providing a continuous market for trading. The total value of active contracts on decentralized exchanges like Hyperliquid has hit record highs, with some contracts reaching $1.2 billion in value.
While weekend trading volumes are still smaller than those on weekdays, they are no longer negligible, and traders are starting to take notice. Researchers at Energy Aspects believe that the growth of perpetual futures contracts will change the way traders price short-dated West Texas Intermediate crude options, as they can now hedge their exposure over the weekend. The implications of this shift are significant, as traders may be willing to pay a higher price for volatility on different venues, and the traditional 'weekend effect' in short-dated WTI options may start to narrow.
However, institutional traders are still hesitant to enter the market, citing lack of liquidity and infrastructure as major concerns. Despite these challenges, the rise of perpetual futures contracts is likely to continue, and may eventually influence traditional markets, providing a new source of price discovery and changing the way traders behave. As CME's Terry Duffy noted, 'I think that markets will be 24/7 down the road. All markets.'