Derivatives Are Making a Significant Debut in Crypto Markets


The derivatives market has stood out as one of the most lucrative trading ecosystems given that participants can bet on the future prices of underlying products. It is now finding a way into the burgeoning crypto market following recent price surges; Bitcoin, which leads the pack, broke its previous all-time high of $20,000 and has since doubled the value to test $42,000 at the beginning of January.

That withstanding, the evolution of digital assets technology is gradually coming of age from both a fundamental perspective and technical outlook of the market. The introduction of crypto derivatives is an example of this growth, especially for market makers who mostly rely on diverse products to fuel their trading activity. Unsurprisingly, an increased product range seems to have attracted more capital with the crypto market cap hitting $1 trillion.

The Value Proposition of Derivative Markets in Crypto

While derivatives have existed in traditional markets for quite some time, most people find it difficult to interact with this asset class despite its value proposition in hedging strategies. Well, the concept basically involves acquiring a market product ‘derivative’, whose value is derived from an underlying asset. Such markets exist for financial products as well as commodities ranging from …

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