BitMEX CEO explains how perpetual swaps test altcoin value

BitMEX CEO Stephan Lutz said observing how exchanges influence perpetual swap contracts can help traders avoid pump-and-dump schemes.

As the cryptocurrency market matures, advanced trading instruments like perpetual swap contracts are increasingly influencing the value of altcoins, according to BitMEX CEO Stephan Lutz.

Perpetual swap contracts are a type of crypto trading contract that lets traders bet on the price of a coin without actually owning it. The derivatives product functions similarly to a futures contract. However, it never expires, which means that traders can hold the position as long as they want.

Lutz told Cointelegraph that perpetual swap contacts are important to track because newly launched perpetual swaps allow traders to short the underlying altcoin for the first time. Lutz said this is where “true price discovery” begins:

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