BitMEX CEO Discusses How Perpetual Swaps Test the True Value of Altcoins

As the cryptocurrency market continues to evolve, advanced trading instruments like perpetual swap contracts are becoming increasingly influential in determining the value of altcoins. Stephan Lutz, CEO of BitMEX, recently shared insights on how these contracts impact price discovery and why traders should pay close attention to their movements to avoid potential pitfalls.

Understanding Perpetual Swaps

Perpetual swap contracts are a type of derivative product in crypto trading that allows traders to speculate on the price of a cryptocurrency without actually owning it. These contracts function similarly to futures contracts, but with a significant difference: they never expire. This allows traders to hold positions for as long as they wish, making it an appealing tool for both hedging and speculation.

According to Lutz, perpetual swaps play a crucial role in the price discovery process, especially for newly launched altcoins. These contracts are often the first derivative products to be introduced, providing valuable insights into market sentiment. "Perpetual swaps play a key role in price discovery for newly launched altcoins and are a strong sign of market sentiment," Lutz explained.

The ability to take both long and short positions in perpetual swaps adds an extra layer of depth to trading strategies. By tracking these positions, traders can gain insights into the market's directional bias—whether traders are predominantly betting on an altcoin’s rise or fall. For Lutz, this means that observing perpetual swap movements offers traders a closer look at how the market perceives and determines an altcoin's value.

Perpetual swaps data on crypto exchanges. Source: BitMEX

The Impact of Exchange Listings on Perpetual Swaps

Lutz also pointed out that exchange listings can significantly influence the movement of perpetual swap contracts. Due to the high liquidity and leverage involved, price fluctuations in perpetual swaps can have a ripple effect on the spot price of an asset. A sudden surge or drop in perpetual swap contracts can lead to corresponding movements in the spot market, affecting the asset’s real-time trading price.

To further illustrate the significance of exchange listings, BitMEX conducted a study examining how different exchanges impact perpetual swap contracts. The data revealed interesting patterns across various platforms. For example, from the start of 2025 to March 18, OKX saw 70% of its newly listed perpetual swaps reach new all-time highs on their first day. In contrast, Bybit and BitMEX saw around 41% of contracts hit new highs, while Binance exhibited a perfect split of 50%, meaning some contracts reached their all-time highs while others did not.

Lutz emphasized that this data shows how critical it is for traders to carefully select which exchange to leverage when trading perpetual swaps. The platform chosen can significantly impact returns on investment (ROI) and also help avoid the common risks associated with volatile pump-and-dump schemes that often occur in less stable markets.

"For traders in particular, having a careful selection process of which exchange to leverage when trading perps can have a big impact on ROI and help avoid the commonly seen pump and dump scheme," Lutz added.

Conclusion

As the crypto market matures, perpetual swap contracts are playing an increasingly important role in determining altcoin value. By understanding how these contracts operate and how exchanges influence their movements, traders can gain a deeper understanding of market sentiment and make more informed decisions.

For those looking to navigate the world of crypto derivatives, paying attention to the nuances of perpetual swap contracts and the exchanges that list them could provide a significant edge—helping avoid common pitfalls and potentially unlocking new opportunities for profit.