A crypto derivative is a financial product or instrument whose intrinsic value is based on the value of an underlying crypto asset. There are many crypto derivatives including futures, options and contracts for difference or CFDs. Here are some important facts about these instruments:
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Crypto derivatives are only available on select exchanges and involve significant risk.
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Derivatives are typically leveraged products with the potential to generate quick profits or losses within a short period of time.
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Not all cryptocurrencies are available for derivatives trading, but more are expected to be available in the near future.
Well, for investors looking to profit from leveraged derivatives in the crypto market, here are two assets to consider:
Bitcoin (BTC) derivatives
As the most established cryptocurrency in the world, it was only a matter of time before Bitcoin (BTC) derivatives trading began. In fact, exchanges like Binance offer specialized derivatives products for Bitcoin, including futures, options, and others.
Data source: Tradingview.com
Additionally, Bitcoin (BTC) is supported on all major exchanges, giving you more flexibility when trading. Many online brokers also offer leveraged Bitcoin (BTC) derivatives to global clients. Therefore, it should be easier to invest and also, with the kind of liquidity you get with Bitcoin, it will be very easy to execute orders.
Ethereum (ETH) derivatives
Ethereum (ETC) derivatives are also supported on virtually all exchanges. Also, this is a coin that generally achieves a large trading volume and therefore offers enough liquidity to trade leveraged derivatives with ease.
Exchanges are also developing highly customized Ethereum (ETH) products, which can be a bit complex for the average investor. However, the main thing to remember is that the value of the derivative always depends heavily on the value of Ethereum (ETH) on the open market. At the time of writing, ETH was trading at $3,812.
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