Are Trading Vehicles Dragging Crypto Into Maturity?

A slow proliferation of a variety of crypto derivatives has transpired.

There are many instruments for enterprise Bitcoin traders that now exist, raising important fundamental questions while giving us a glimpse of where the crypto market as a whole may end up.

If derivative traders are trading Bitcoin they don't own, exposure is possible without buying physical BTC. In this case, is the fundamental value of blockchain being mortgaged for the promise of easier speculation?

The proliferation and maturity of derivatives may even be what's holding back crypto from achieving the status and market capitalization it deserves.

These come in many shapes and sizes and allow various strategies to be pursued in the crypto market.

The future of decentralized derivativesHalf the battle for new derivatives and crypto instruments has been tied to figuring out how to loop in the traditional fiat economy, and it's a testament to this struggle that it took Bakkt until 2019 to create the first derivative to link these two worlds.

"An ETN will be the first genuine exchange traded product with crypto as the underlying that we will see in regulated marketplaces. It's the perfect investment product to facilitate the adoption of crypto as an asset class with institutions as it tracks the performance of Bitcoin or another crypto one-to-one, provides superior liquidity relative to the exchange traded certificates available today, and provides many institutional managers an International Securities Identification Number so they may legally diversify their portfolio into crypto."

A maturing market and a mysterious futureAs liquidity due to derivatives increases, economists have estimated that crypto markets will be less volatile, providing a more enticing lure for funds that wish to expose their capital to inclusive growth strategies.

At the end of the day, derivatives are meant to control risk as much as they're good at encouraging speculation, and their comfortability and fast growth in crypto is a characteristic that undoubtedly resembles development.

It's easy to say that incumbent fiat ideas have changed crypto.