Welcome to the first article of our crypto derivative series. This article will give you an overview of the crypto derivative markets.
Key Takeaways
- Crypto derivatives reached a milestone in 2017 when CME and CBOE launch Bitcoin futures. And now it accelerates to enter the next rise.
- For both BTC and ETH, their derivatives markets dominate their spot markets, and their derivatives volume is around five times larger than their spot volume.
- Bitcoin and Ether are the most common underlying assets, given that their futures volume accounts for around 80% of the total future trading volume.
- The benefits of crypto derivatives are cash settlement, crypto short, and margin trading.
- Institutional investors actively joined derivatives markets in the 4Q 2020, supported by the surge of CME trading volume.
- Futures are the largest traded derivatives, and perpetual swap – an innovative type of futures – dominates the overall futures trading.
- DeFi has a very small proportion in the crypto derivatives markets.
- Crypto derivatives inherit the risks from traditional derivatives and crypto markets, namely: liquidity risk, asset risk, exchange risk, and regulatory risk.
Read the full version of the Crypto Derivative Market Overview here.
