Crypto Derivatives: On Misleading Measurements

Publicado en by Coindesk | Publicado en

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.

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