Summary:
In a recent essay titled “Survival of the Fittest: How Perpetual Contracts Are Disrupting the Traditional Financial Landscape,” Arthur Hayes — co-founder of BitMEX and current CIO of Maelstrom Fund — forecast that price discovery for the largest U.S. tech stocks and major equity indices will increasingly occur in perpetual-contract (“perps”) markets, rather than traditional stock exchanges, by the end of 2026.
What Hayes Is Saying
- Hayes argues that perpetual contracts — derivatives that never expire and often trade 24/7 — are better suited than traditional futures or stock markets for the global, always-on economy.
- He notes that infrastructure for equity perps already exists, with “stock index perpetual contracts” drawing daily volumes exceeding US$100 million. As traders and market-makers become more comfortable, he expects volumes to rise — possibly reaching “billions of dollars per day.”
- Hayes suggests that because perps allow continuous trading outside conventional market hours, they will become ideal tools for trading or hedging around global events, weekend news, and unpredictable developments. This 24/7 availability, he predicts, will pressure traditional exchanges to adapt — or risk irrelevance.
- He envisions a time when mainstream financial media may start quoting perp market tickers (e.g. for the S&P 500 or major tech stocks) as primary price indicators, instead of traditional exchange prices.
Why This Matters
A shift in Price Discovery Mechanism
If perps supplant traditional exchanges for price setting, it could reshape how valuations are formed — potentially increasing volatility, liquidity, and global access. Stocks could effectively trade 24/7, democratizing access across time zones.
Global Access & Democratization
Perpetual-contract markets are often easier to access than traditional equity markets for overseas or retail investors. By enabling continuous trading, these markets could attract a broader base beyond institutional traders.
Impact on Traditional Markets Infrastructure
Traditional equity exchanges and clearinghouses may face pressure to innovate. If perps dominate, existing structures for settlement, custody, and clearing may require overhaul to remain relevant.
Potential Risks & Regulatory Challenges
Shifting price discovery to perps could create regulatory, transparency, and settlement-risk challenges. Since perps are derivatives, they carry leverage risks; global regulatory regimes might need to evolve to cover 24/7, cross-border derivatives trading.
Broader Context
- Hayes has been vocal about global liquidity trends and increasingly bullish on crypto and macro markets — including predictions of extended crypto bull markets through 2026.
- His advocacy for perps comes at a time when crypto-native derivatives platforms (centralized or decentralized) are increasingly offering so-called equity-perp or synthetic-stock products to retail investors. This crossover between TradFi equities and crypto-style derivatives underpins Hayes’ forecast.
What to Watch
- Regulatory responses — watch whether U.S. and global regulators move to license or regulate equity perps, especially those offered by non-traditional exchanges.
- Adoption by institutional investors — whether hedge funds and other large investors begin using perps over traditional equity/futures markets.
- Volume growth and liquidity data — confirmations that perps daily volumes scale to “billions per day,” as Hayes predicts.
- Impact on traditional exchanges — whether major U.S. stock exchanges adapt, offering their own perp-style products or extending trading hours.
- Price stability and volatility — as continuous trading and leverage increases, volatility might rise, affecting valuations and market risk.
Bottom Line:
Arthur Hayes’ argument — that equity-perpetual contracts will overtake traditional exchanges as the primary venue for price discovery for major U.S. stocks by end-2026 — represents a bold vision of market evolution. If correct, it could reshape how stocks trade, who trades them, and when. The next 18 months will be critical in determining whether this is a fringe theory or the beginning of a paradigm shift.
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