The bank indicated that institutional appetite for perpetual futures is limited, viewing them as more suitable for speculative trading than for hedging purposes.
By Will Canny, AI Boost|Edited by Stephen Alpher Jun 29, 2026, 12:48 p.m. 2 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on JPMorgan sees limited institutional demand for perpetual futures. (Unsplash)SummaryShow- JPMorgan's client assessments revealed minimal institutional interest in perpetual futures outside of speculative trading.
- Concerns related to basis risk, the absence of a term structure and physical delivery, and clearing issues were identified as significant barriers to adoption.
- The perpetuals market is largely controlled by a handful of major players, raising questions about scalability.
According to JPMorgan's latest report, institutional interest in perpetual futures is quite limited, as these products are primarily perceived as speculative trading tools rather than effective substitutes for traditional derivatives.
The bank's insights, drawn from discussions with clients and market observers, suggest that institutional enthusiasm for perpetuals is tepid. Despite offering advantages like 24/7 trading and the elimination of futures roll costs, the majority of trading activity appears to be driven by traders looking for leveraged exposure rather than by producers, consumers, or other market participants aiming to hedge risks associated with underlying assets.
"Our investigations at J.P. Morgan indicate that we are not observing significant institutional demand," the analysts noted in their report.
They further elaborated, stating, "There seems to be a consensus that the activity around perpetuals is more aligned with speculative trading strategies rather than hedging by those with real market exposure."
The report claims that perpetuals do not provide substantial advantages over traditional derivatives for institutional investors. On-chain perpetuals are unlikely to attract U.S. institutions due to the lack of standard clearing protections, while off-chain options may mitigate roll risk but still carry other inherent issues.
Perpetual futures, often referred to as "perps," have gained prominence in the crypto derivatives landscape, allowing traders to maintain leveraged positions without an expiration date. Unlike conventional futures that settle on a predetermined date, perpetuals utilize a funding-rate mechanism to keep their prices in sync with the spot market.
These products account for approximately 90% of trading in crypto derivatives and frequently result in volumes that exceed those of spot markets, playing a critical role in market liquidity and price discovery.
JPMorgan also pointed out several factors that might hinder institutional acceptance of perpetuals, such as unbounded basis risk, the lack of a forward term structure, and often a deficiency in physical delivery. These traits render perpetuals less effective for commercial hedgers and asset managers who depend on contracts closely aligned with regulated indices and forward pricing curves.
The report highlighted a concentration issue in offshore perpetual markets as an additional challenge. According to public data from Hyperliquid, trading activity is largely concentrated among a small group of major players, with about half of perpetuals volume being funded by just 12 wallets. This concentration raises concerns about market depth and the capacity of these products to accommodate broader institutional participation.
Despite its reservations, JPMorgan recognized that perpetuals do offer benefits for certain market participants. Their continuous trading, flexible holding periods, and built-in leverage make them particularly attractive to retail traders and those employing momentum strategies, while also removing the need to roll over expiring futures contracts. These characteristics are likely to continue driving retail interest even if institutional adoption remains limited.
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