The Boom Of Crypto Derivatives Trading

The current crypto market is different from several years ago due to the rise in crypto trading and Decentralized Finance (DeFi) protocols. To boost the trade of cryptocurrencies, exchange platforms have been innovative in introducing new products such as crypto derivatives.

The first crypto derivatives were launched at the Chicago Board Options Exchange (CBOE) and the Chicago Mercantile Exchange (CME) and were named Bitcoin futures. Bitcoin futures are the most popular crypto derivatives and they have enjoyed staggering crypto volumes.

What is Crypto Derivatives Trading?

In general, derivatives are financial instruments that allow two parties to buy or sell an underlying asset or commodity at a predetermined future date. Crypto derivatives trading is where two parties sign a contract that agrees to buy or sell cryptocurrencies at a predetermined date in the future. Once the date is reached, the two parties will be obligated to fulfill the contract regardless of the market prices.

The main reason behind crypto derivatives trading is not to earn profits but to reduce risk levels associated with volatile assets. For example, if a trader predicts that Bitcoin will increase in the future, they can invest in crypto derivatives to buy BTC in the future. If a trader predicts a fall and they already own Bitcoin, they can invest in crypto derivatives to sell BTC at a future date, hence avoiding losses.

Where Can I Trade Crypto Derivatives?

To trade crypto derivatives, one needs to sign up on a futures exchange platform such as Digitex, which offers a robust framework and generous rewards programs, making it the perfect choice for crypto derivatives trading. This platform will enable you to trade crypto derivatives at lightning speed and enjoy zero fees.

One of the best things about crypto derivatives trading is that it allows crypto holders to hedge against the heightened risk of trading with volatile cryptocurrencies.

Derivatives trading is not only popular in the cryptocurrencies sector, but it is also used by airlines in the US as a means of hedging against volatile oil prices. This allows their competitors to pay less fees.

Benefits of Crypto Derivatives Trading

Many crypto traders, especially those who are new in the crypto market, usually opt for crypto derivatives because they do not want to invest all their savings in a highly volatile market. This is the main reason why exchanges have launched crypto derivatives to target these clusters of traders.

The benefits that lie in crypto derivatives trading include the following:

Mitigating Against the Highly Volatile Cryptocurrency Market

The main reason traders invest in crypto derivatives is to help them avoid the high-risk level attributed to the volatile nature of cryptocurrencies. We have all witnessed how Bitcoin prices and even other altcoins have fluctuated over the years. To reduce the losses that a trader can make, one can invest in derivatives trading to guarantee that the varying market price will not affect the value of their investment by a great margin.

It Gives Beginners Exposure to Crypto Assets

Another great benefit of investing in cryptocurrencies is that it gives new investors exposure to digital assets. Most investors who are just joining the crypto sector do not have the insights that may help them avoid the high-risk levels associated with the market.

Crypto derivatives will introduce new traders to this market without exposing them to high levels of risk that may cause them financial harm. It also doubles as a great strategy for new investors who want to purchase large amounts of cryptocurrencies.

Helps in Price Speculation

Derivatives trading is a betting strategy that allows you to sell or buy at a predetermined future date. Traders can use crypto derivatives to speculate on the price performance of a cryptocurrency in the future.


Crypto derivatives trading is a strategy that has greatly helped in the recent crypto boom. Because of the volatile nature of cryptocurrencies, derivatives can be a great way of mitigating and hedging against risk.

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