A crypto derivative is a product or financial instrument whose intrinsic value is based on the value of an underlying crypto asset. There are many crypto derivatives out there, including futures, options, and contracts for difference or CFDs. Here are some important facts about these instruments:
Crypto derivatives are only available on selected exchanges and carry a significant degree of risk.
Derivatives are generally leveraged products with the potential to make rapid gains or losses within a short period of time.
Not all cryptocurrencies are available for derivatives trading, but more are expected in the near future.
Well, for investors who want to profit from leveraged derivatives in the crypto market, here are 2 assets to consider:
Bitcoin derivatives (BTC)
As the world’s most established crypto, it was only a matter of time before trading Bitcoin (BTC) derivatives have started. In fact, exchanges like Binance have dedicated derivatives for Bitcoin, including futures, options, and the like.
Data source: Tradingview.com
Additionally, Bitcoin (BTC) is supported on all major exchanges, giving you more flexibility to trade. Many online brokers also provide Leveraged Bitcoin Derivatives (BTC) to global clients. So it should be easier to invest and besides, with the kind of liquidity you get with Bitcoin, filling orders is going to be very easy.
Ethereum Derivatives (ETH)
Ethereum (ETC) derivatives are also supported on literally every stock exchange. In addition, it is a coin that generally obtains a huge trading volume and as such offers enough liquidity to easily trade leveraged derivatives.
Exchanges also create highly personalized Ethereum (ETH) products which can be a bit complex for the average investor. But the bottom line here is that the value of the derivative will always depend heavily on the value of Ethereum (ETH) in the open market. At the time of this writing, ETH is trading at $ 3,812.