Holding a perpetual contract for an extended period can be a strategic move for traders who anticipate long-term price movements in assets like Bitcoin. However, one critical factor often overlooked is the cumulative cost of fees—especially when positions remain open for months or even a full year. Understanding how these costs accumulate is essential for evaluating net profitability.
This article breaks down the components of perpetual contract fees, explains how to calculate holding costs over 12 months, and offers insights into optimizing your trading strategy while minimizing unnecessary expenses—all without compromising on accuracy or clarity.
What Is a Perpetual Contract?
A perpetual contract is a type of derivative that allows traders to speculate on the price of an underlying asset—such as Bitcoin or Ethereum—without an expiration date. Unlike traditional futures contracts, which settle on a specific date, perpetual contracts can be held indefinitely.
To keep the contract price aligned with the spot market, exchanges use a mechanism called funding rates. These rates are exchanged between long (buy) and short (sell) positions every 8 hours, ensuring the contract doesn’t deviate significantly from the index price.
👉 Discover how funding rates impact your long-term trades and learn to predict cost patterns.
Components of Perpetual Contract Fees
When calculating the total cost of holding a perpetual contract for a year, two main types of fees come into play:
- Opening fee (taker/maker fee)
- Funding payments (holding cost)
Let’s examine each in detail.
1. Opening Fee
The opening fee is charged when you enter a position. It's typically a small percentage of the contract value and varies depending on whether you're a maker (providing liquidity) or a taker (taking liquidity).
Most exchanges use either:
- A flat rate, e.g., 0.05%
- Or a tiered fee structure based on trading volume
For example:
If you open a $10,000 BTC/USDT perpetual contract with a taker fee of 0.05%, your opening cost would be:
$10,000 × 0.05% = $5
This fee is paid once per trade. If you open and hold a single position for a full year without adjusting it, you’ll only pay this fee once.
However, if you close and reopen positions periodically (e.g., due to leverage adjustments), this cost can compound over time.
2. Funding Payments
Funding payments are unique to perpetual contracts and occur every 8 hours on most platforms. They are not direct fees charged by the exchange but transfers between traders:
- When funding rate > 0: Longs pay shorts
- When funding rate < 0: Shorts pay longs
The amount depends on:
- Your position size
- The current funding rate
- How frequently funding is applied
Example Calculation:
Assume:
- Position size: $10,000
- Funding rate: 0.01% per 8-hour period
- Funding occurs 3 times per day
Each funding payment:
$10,000 × 0.01% = $1Daily cost (if always paying):
$1 × 3 = $3/dayAnnual cost:
$3 × 365 = $1,095 per yearThat’s over 10% of your initial position value in just funding transfers alone.
💡 Note: This doesn’t include slippage, liquidation risks, or potential changes in funding rates.
How Much Does It Cost to Hold a Perpetual Contract for One Year?
Now let’s combine both components into a full annual cost estimate.
Scenario: Holding a $10,000 Long Position for One Year
| Cost Component | Calculation | Annual Cost |
|---|---|---|
| Opening Fee (taker) | $10,000 × 0.05% | $5 |
| Funding Payments | $10,000 × 0.01% × 3 × 365 | $1,095 |
| Total Estimated Cost | $1,100 |
So, holding this position for one year could cost approximately $1,100, or 11% of the original position value.
👉 See real-time funding rates and estimate your potential holding costs before entering a trade.
Keep in mind: this assumes a constant funding rate of 0.01%. In reality, funding fluctuates based on market sentiment, volatility, and demand for leverage.
During bull markets, longs often dominate, pushing funding rates higher—sometimes exceeding 0.1% per cycle, which would increase annual costs to over **$10,000** on a $10,000 position!
Key Factors That Influence Holding Costs
Understanding the variables behind perpetual contract fees helps you anticipate and manage them more effectively.
🔹 Market Sentiment
Bullish markets usually result in positive funding rates as more traders go long. This increases the cost of holding long positions.
🔹 Leverage Used
Higher leverage amplifies both gains and losses—and also makes funding payments more impactful relative to equity.
🔹 Funding Rate Volatility
Some assets have stable funding; others swing wildly. For example, meme coins often see extreme funding spikes during rallies.
🔹 Position Size
Larger positions naturally incur higher absolute funding costs—even if the rate remains low.
Frequently Asked Questions (FAQ)
Q: Are funding fees always paid daily?
No. Funding is typically settled every 8 hours, not daily. Most major exchanges—including OKX, Binance, and Bybit—apply funding at fixed intervals (e.g., UTC 00:00, 08:00, 16:00).
Q: Can I earn funding instead of paying it?
Yes! If you hold the underrepresented side of the market (e.g., shorting during a bullish trend), you receive payments from the dominant side. In some cases, this can generate passive income.
Q: Does holding longer always mean higher costs?
Generally yes—but not necessarily. If funding rates turn negative or decrease over time, long holders may actually benefit. Strategic timing can reduce or even reverse net costs.
Q: Is there a way to avoid funding fees entirely?
You cannot eliminate funding payments on perpetual contracts—but you can:
- Trade spot instead
- Use traditional futures with expiry dates
- Time entries around low-funding periods
Q: How do I check current funding rates?
Most exchanges display real-time funding rates on the trading interface. Look for labels like “Next Funding” or “Funding Rate” beneath the price chart.
Smart Tips to Minimize Long-Term Holding Costs
While perpetual contracts offer flexibility, they aren't designed for passive long-term investing. Here’s how to stay ahead:
- Monitor funding trends: Use historical data to avoid entering longs during periods of high positive funding.
- Switch to spot during bull runs: If funding exceeds 0.1% regularly, consider buying spot instead.
- Use limit orders as maker: Reduce opening fees by placing limit orders rather than market orders.
- Diversify across instruments: Combine perpetuals with quarterly futures or options for better cost control.
Final Thoughts
Holding a perpetual contract for a year isn’t free—and the hidden cost of recurring funding payments can erode profits significantly. As shown in our example, even a modest 0.01% funding rate can add up to over **$1,000 annually** on a $10,000 position.
Successful traders don’t just focus on entry and exit points—they also account for ongoing costs like funding and trading fees. By understanding how these charges accumulate, you can make smarter decisions about when to hold, when to close, and when to switch instruments altogether.
Whether you're planning a long-term bullish bet or hedging against downside risk, always calculate the full cost of carry before opening a leveraged position.
👉 Start tracking live funding rates and simulate annual holding costs with advanced trading tools.
By integrating fee awareness into your strategy, you’ll trade not just aggressively—but sustainably.