The following article originally appeared in Institutional Crypto by CoinDesk, a weekly newsletter focused on institutional investment in crypto assets.
The story is that crypto derivatives are booming, which points to increasing market sophistication and liquidity.
Notional volume represents the market value of the underlying asset to which the derivative contract gives exposure.
This is one of the main advantages of trading crypto derivatives vs the underlying asset: you can get exposure to a much greater amount that what you put in.
What's the big deal? Doesn't theoretical exposure represent actual exposure?
First, most crypto futures in the market today are cash-settled.
The exposure is financial, not "Real," and comparing these instruments to actual transactions in an asset is misleading.
Derivatives are bets on the future; the state of the spot market is a statement about present value.
The "Notional" debate is not a problem specific to crypto markets.
Often the story is more complex than it seems, and - especially in such a young market as crypto - almost always more interesting.
Crypto Derivatives: On Misleading Measurements
Publicado en Oct 19, 2019
by Coindesk | Publicado en Coinage
Coinage
Noticias recientes
Ver todo
Blockchain Bites: Bitcoin's Run, Uniswap's Hemorrhaging Value, Anchorage's Banking Bid
Bitcoin is nearing all-time highs in price and market cap last set three years ago.
Japan's megabanks to lead experiment with digital yen
We have, in order, Cheese Bank with a $3.3 million theft, Akropolis with its $2 million loss, Value DeFi with a whopping $6 million exploit and finally Origin Protocol's loss of $7 million.
Number of new Bitcoin addresses spikes amid growing FOMO
Japan's three largest banks, as part of a group of 30 private sector actors, are set to collaborate on an experiment with a digital yen.
Not just Wall Street: Quant trader explains why Bitcoin price is going up
Sam Trabucco, a quantitative trader at Alameda Research, believes four general factors are pushing up the price of Bitcoin.