What are Crypto Derivatives?The crypto derivatives market has exploded over the past couple of years, ever since the CME (Chicago Mercantile Exchange) and CBOE (Chicago Boards Options Exchange) launched Bitcoin Futures in 2017.According to recent reports by CoinMarketCap, Binance recorded a massive crypto derivatives volume of $42 billion. CME reported that in April 2021, Bitcoin Futures alone reached a total market volume of $28 billion. Ever since the birth of crypto derivatives, there has been a mounting interest among traders. They want to know what crypto derivatives really are, and how they can benefit them.So, let\u2019s talk about what crypto derivatives are, their benefits, and the different variations in the market.Before we explain what crypto derivatives really are, let\u2019s quickly review derivatives trading in general.Derivatives are an age-old financial tool used by traders and merchants. Derivatives are used as a form of security against an underlying asset that has financial value (a fixed price). Derivatives were used as contracts between two parties who wanted to trade, buy or sell a product based on its future price. The value of the underlying asset served as a benchmark based upon which the future price was determined. The future price depended on market fluctuations and changes based on this benchmark. Derivatives can be anything like a bond, stock, interest rates, and in this case, cryptocurrencies.A crypto derivative is a financial contract based on an underlying asset whose price is fixed, and facilitates cryptocurrency trading in a way that attempts to even out the existing volatility of the market. On the day of the trade, both the crypto traders have to honor the price (both buying and selling) that was decided on the day the contract was signed. Crypto derivatives trading can be done on DeFi (decentralized finance), CeFi (central finance), and C2C (customer-to-customer)\u2026<\/p>","protected":false},"excerpt":{"rendered":"
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