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What are Crypto Derivatives?

What are Crypto Derivatives?

Welcome to Bitget - the world’s fastest growing crypto derivatives trading platform.

It is way easier to invest in crypto like Bitcoin in 2022. You can directly purchase crypto through peer-to-peer transactions, crypto exchanges or Dex (decentralized exchange).

Our detailed guide covers the basics of crypto derivative types, trading options, tips for trading, and their future development.

What are Crypto Derivatives and are they regulated?

Derivatives are the financial assets that are linked to the value of underlying assets, in which crypto derivatives are assets linked to the value of crypto, like Bitcoin or ETH.

Compared to directly holding a Bitcoin or ETH like spot trading, the cost of transaction in derivatives trading is cheaper. It enhances trading efficiency. Experienced crypto traders may purchase crypto derivatives products to carry out risk management or speculation.

Are crypto derivatives regulated?

US Cryptocurrency regulations on exchanges have stated that they are legal and fall under the regulatory scope of the Bank Secrecy Act (BSA).

Bitget's commitment to compliance

As an industrial leading crypto exchange platform, Bitget has taken different steps to compliance and user protection globally, including being licensed by FinCEN in the United States, FINTRAC in Canada and AUSTRAC in Australia.

Basically, if any one of the licenses is acquired, it has been verified as a reliable crypto derivatives exchange. And Bitget can get all three licenses, so you don’t need to worry about legal compliance when trading.

Three common types of crypto derivatives

The most common types of derivatives trading include:

Futures: A futures contract is a legal agreement between two parties to buy or sell a specific amount of crypto at a specific future time.

Each future transaction will include both long (agree to purchase) and short position (agree to sell). If a buyer goes long on a crypto futures contract and the marked price on the contract is above the forward price at the expiration date, the buyer will profit and the short position will suffer loss.

If the marked price is below the forward price at the expiration date, the buyer will lose money and the short position profits.

Options: Option is similar to the future. But both buyers and sellers have no duty to purchase or sell crypto at a defined future date and price. Their maximum loss is the margin paid if they don’t carry out the transaction.

Perpetual contracts: Unlike futures or options, perpetual contracts have no expiration or settlement date. Traders can keep their positions open indefinitely if their accounts hold a certain amount of crypto for mortgages.

The Crypto Derivatives Landscape

After the success of Ethereum in 2017, we have experienced the bubble popping moment of ICO in 2018: more and more crypto projects were launched everyday. So many crypto exchanges were set up at that time. The crypto derivatives market was completely messy.

But in 2019, many of the problems have started to be fixed. Crypto exchanges started to improve their risk control ability. The derivatives market has become more transparent and efficient.

Due to the mature and fast growing rate of the crypto market, more investors from traditional financial markets may enter the market of crypto-derivatives products. The exchanges with reliable trading systems, high standards of security and word-of-mouth may dominate the crypto derivatives market.

Bitget as the leading in the Crypto Derivatives platform

Launched in 2018, Bitget is now the dominating crypto derivatives trading platform with multiple innovative products, including Bitcoin and other Futures Contracts.

Bitget as the leading in the Crypto Derivatives platform

Activities and Liquidity

Our efforts have resulted in a huge customer base of 2 million users from 40 countries worldwide.

In terms of scale, Bitget is indeed the world’s largest digital copy trading exchange, where over 55,000 professional traders have accumulated a total income US$300 million and their 1.1 million followers more than US$350 million.

Bitget is the biggest crypto copy trade platform and acknowledged as the Top 3 Crypto Derivatives Exchange in terms of Liquidity by TokenInsight.

Responsible Leverage

Bitget users can conveniently increase their returns with the use of leverage. More volatile assets will have lower leverage levels to reduce traders’ exposure to extreme price movements.

At the same time, we strictly demand that users comply with our margin requirements and introduce risk margin to help users better resist liquidation risks.

Real-time basis

One more unique feature of Bitget is profits and losses are settled on a real-time basis, representing our guarantee for a sophisticated, accurate data system.

Traders will be able to manage their account commensurate with the market, thus always in the process of improving their trading knowledge and skills.

Now are you ready to invest in cryptocurrencies?

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All products and projects listed on this article are not endorsements, and are provided for informational purposes only.