Markets
Crypto Derivatives Markets: Bitcoin vs. Ethereum
introduction
Derivatives play a crucial role in financial markets, providing essential tools for hedging, speculation and price discovery. These instruments derive value from the underlying assets, allowing market participants to manage risk and gain exposure to asset price movements without directly owning the assets. In the traditional financial market, derivatives represent a huge category. The Bank for International Settlements (BIS) reported that the notional amount of OTC derivatives reached $667 trillion at the end of last year.
Although the crypto derivatives market is significantly smaller, it has grown significantly over the past two years and has become an essential part of the broader market. Crypto derivatives have become indispensable tools for managing inherent volatility and leveraging investment strategies. Bitcoin (BTC) and Ethereum Derivatives (ETH) are the mainstays of this relatively young market, despite many other derivative products based on smaller cryptocurrencies.
The growing adoption of these derivatives demonstrates their importance in improving market liquidity, enabling sophisticated trading strategies and facilitating price discovery. In this report, CryptoSlate will explore the theoretical and practical differences between BTC and ETH and their respective futures, options, and perpetual futures markets.