One advantage that traders have in the traditional
financial markets over cryptocurrency ones is the option to trade derivatives.
Financial contracts for futures, options, and other derivatives have long been
a backbone driving new investments and unique commodity combinations.
Cryptocurrency-based derivatives have been slowly
gaining popularity for the better part of a decade. For experienced traders,
their rise represents a sophisticated step forward in what digital assets are
capable of achieving.
By offering services that mimic what quantitative
analysts and deft-handed traders seek in traditional financial instruments, the
blockchain ecosystem demonstrates its viability as a true competitor to the
fiat world.
That being said, in crypto’s quest to rival
traditional financial trading, the learning curve to get traders involved comes
with a learning curve too steep for many to even consider. Remember, crypto
doesn’t necessarily function in the same way as traditional currencies. That
fact necessitates a degree of financial and technological understanding that
some traders don’t want to bother exploring.
Crypto-based derivatives have incredible potential,
but the potential doesn’t matter if nobody actually uses
these tools. So, it’s time for crypto companies that want to offer derivatives
contracts to understand what gaps remain in getting traders and liquidity on
board.
Benefits of Crypto Derivatives
The appeal of derivatives like options and futures in
crypto is pretty much identical to those in traditional finance. For
quantitative analysts, or quants, who work tirelessly to investigate market
directions and take positions on movements based on incredibly complex
financial models—crypto is a novelty that could lead to generous rewards.
It’s official! Coinbase International Exchange is here. Institutional traders in eligible non-US jurisdictions now have access to trade perpetual futures settled in USDC with up to 5x leverage.
Read more about our announcement ⬇️https://t.co/vrIfK999om pic.twitter.com/E5ssl8NBz3
— Coinbase International Exchange 🛡️ (@CoinbaseIntExch) May 2, 2023
This is exemplified by the crypto derivative market’s
potential to benefit from reactivity to news and worldwide developments. For
instance, crypto has become a hot-button political issue, given its potential
impacts on worldwide markets and continuing development in real-world
applications.
More countries are considering launching proprietary…
