The traditional Friday afternoon mindset on commodity trading desks is shifting, as traders are no longer solely focused on mitigating risk until markets reopen on Sunday evening. With the rise of perpetual futures contracts, also known as 'perpetuals' or 'perps,' traders can now hedge their positions and make adjustments over the weekend, reducing the uncertainty and risk associated with market closures. 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.' The availability of perpetual contracts on crypto exchanges has created a 24/7 venue for oil derivatives trading, allowing traders to react to market changes in real-time, rather than waiting for traditional markets to reopen.
This shift has significant implications for the oil market, as traders can now capture profits over the weekend if the market becomes chaotic, rather than simply sitting on their positions. While the volume of perps linked to traditional assets is still relatively small compared to traditional markets, it is growing, and traders are beginning to recognize the value of hedging their positions over the weekend.
However, the lack of meaningful liquidity and infrastructure remains a significant barrier to entry for institutional traders. As Gracy Chen, CEO of Bitget, noted, 'The main issue is not really that they can't, it's probably more like they don't see it as profitable enough for them to invest… at least not yet.' The emergence of perpetual futures contracts is also influencing traditional markets, providing traders with a tool to gauge market direction over the weekend.
As Hein Tibosch, head of digital assets OTC and product at Flow Traders, said, 'The perps… will be a pretty good indicator of where the market is heading.' While it remains uncertain whether perpetual futures will reshape the traditional market, there are signs that old habits are already beginning to change, and traders are adapting to the new reality of around-the-clock markets.