Kraken introduces Pi Network’s native PI token perpetual futures, enabling traders to go long or short with up to 20x leverage, boosting trading options.
The transaction provides traders with a novel method of speculating on the price of PI without requiring them to retain the asset. It also represents PI’s début on a significant derivatives platform, even though the token is still not listed on top-tier exchanges such as Binance or Coinbase.
The Mechanism of PI Perpetual Futures on Kraken
Derivative contracts with no expiration date are known as perpetual futures. Traders can establish positions linked to the price of PI and resolve profits or losses according to the price fluctuations over time.
Kraken Pro allows consumers to access these contracts in over 360 markets with over 40 collateral options.
This adaptability enables the implementation of both speculative and hedging strategies. Traders who are optimistic about Pi Network may take a long position, while those who are skeptical may short the token, anticipating a decline in its value.
Small price fluctuations can result in substantial gains or losses when leveraged at 20x.
In the interim, PI has experienced a 10% decline this week, following a fleeting rally to $1.57 earlier this month. The altcoin has underperformed expectations and exhibited extreme volatility despite the ongoing optimistic cycle in the market.
Will futures trading influence the price of the PI Network?
The PI market is now more liquid as a result of the listing. In the long term, volatility may be mitigated by increased trading activity. Nevertheless, leverage can exacerbate price fluctuations in the short term.
The market sentiment regarding PI is already precarious. There are concerns regarding centralization, as 60% of the token supply is still under the control of the core team.
Additionally, as reported, the project’s stability has been questioned due to the high concentration of nodes in Vietnam. Vietnam’s increasingly restrictive crypto laws further exacerbate the burden.
Bearish speculators may initiate leveraged short positions with the advent of futures, potentially accelerating PI’s downward trajectory.
In the interim, the potential for sudden price spikes or crashes could result from increased volatility, leading to liquidations for both parties.
Although future listings present new opportunities, they also increase the risks. To evaluate the effectiveness of directional wagers, traders should monitor funding rates and open interest.
In general, Kraken’s relocation enhances Pi Network’s visibility. However, there is currently a significant amount of skepticism regarding the altcoin’s trajectory in the spot market.
