The Future of Cryptocurrency Derivatives

The Future of Cryptocurrency Derivatives

EQUOS has announced that they plan on becoming the first publicly traded cryptocurrency exchange. This marks a huge leap forward in the progress of cryptocurrency. Many experts have stated that a publicly listed exchange, along with derivatives, are the final step for cryptocurrency to become a mainstream financial instrument.

Anyway, this article will cover the expected future of cryptocurrency in regards to derivatives and publicly traded exchanges. 

What are cryptocurrency derivatives?

Cryptocurrency derivatives are financial instruments that allow one to make bets on cryptocurrency without purchasing the underlying asset. Derivatives usually consist of options, futures, and swaps. 

As you can imagine, derivatives massively change the dynamic of a market. 

Why are cryptocurrency derivatives important?

Cryptocurrency derivatives are important for a few reasons. This section will detail those reasons:

Derivatives Attract Institutional Money

The main importance of cryptocurrency derivatives is that they cause institutional money to enter the market. Many institutional traders do not want to invest in cryptocurrency if it requires purchasing cryptocurrency. 

However, they will gladly invest money in the market if they can purchase options on the future price of cryptocurrency. 

It’s a risk issue, basically. 

Derivatives Lead to Strange Pricing

The other importance of derivatives is that they lead to strange pricing. Cryptocurrency already has strange pricing – the price is extremely volatile with high liquidity, so cryptocurrency will not change that aspect. 

However, cryptocurrency derivatives will make the price of cryptocurrency even more volatile. On the positive side, it will add even more liquidity to cryptocurrency. 

How long have cryptocurrency derivatives been around?

Before we talk about the future of cryptocurrency derivatives, we have to talk about the history of cryptocurrency derivatives. It might surprise many readers, but cryptocurrency derivatives from financial institutions actually existed at one point.

CBOE Global Markets had a Bitcoin futures trading option for about a year starting in late 2017. However, CBOE shuttered Bitcoin futures trading due to low interest in 2019. 

This was mostly a function of the low interest in cryptocurrency following the drop in price in 2019.

The Future of Cryptocurrency Derivatives

bitcoin derivatives

Don’t let CBOE halting Bitcoin futures trading in 2019 scare you off from the future of cryptocurrency derivatives. 

This market is still ripe and ready for investment – all it takes is the next cryptocurrency bull run for cryptocurrency derivatives to become the norm. And once they become the norm, they will likely never become obsolete again.


It’s also important to note that the cryptocurrency derivatives market is much larger than many probably think according to TokenInsight – a cryptocurrency market analysis company.

TokenInsight estimates that the cryptocurrency derivatives market is over $2 trillion dollars, which seems a little high. The point still stands, however, cryptocurrency derivatives are a big market and will only a grow larger as time progresses and cryptocurrency becomes more mainstream.

Are cryptocurrency derivatives worth using?

The value of cryptocurrency derivatives depends on your financial goals. Do you want to make a lot of money from holding cryptocurrency long term?

A cryptocurrency derivative probably is not the best option, but it can work if you choose the right derivative. 

On the other hand, if you are a short term trader, then cryptocurrency derivatives are an amazing investment tool. 

What does a publicly traded exchange mean for cryptocurrency?

Our final interest is a publicly traded cryptocurrency exchange. We know this is not a derivative per se. However, it does provide the opportunity to trade a cryptocurrency related product as a derivative. 

With that in mind, EQUOS could become a sort of cryptocurrency substitute on the NASDAQ. For instance, the price of EQUOS would likely follow the price of cryptocurrency, which would make it a good backdoor derivative of cryptocurrency. 

Finally, a publicly traded exchange will add even more legitimacy to cryptocurrency on Wall Street. A publicly traded company must be audited and file financial documents, so it would likely make EQUOS one of the most trustworthy exchanges. Unfortunately, the fees on a publicly traded exchange will likely be higher than the fees on a private cryptocurrency exchange. 

Final Thoughts

Well, that about covers it for the future of cryptocurrency derivatives. The writing is on the wall with cryptocurrency derivatives – they are only growing over time and will eventually become a mainstream option for people. 

Not to mention that a cryptocurrency exchange, EQUOS, will be a NASDAQ listed exchange at some point. The future really does look bright for cryptocurrency, cryptocurrency derivatives, and the acceptance of cryptocurrency in mainstream society. 

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