Advantages of Establishing a Cryptocurrency Derivatives Trading Platform for Business Growth
The surge in crypto derivatives trading over the past year has been attributable to increased institutional involvement and market maturity. The year 2022 started with a record-breaking trading volume of around $3 trillion in January, as per the CryptoCompare review.
Crypto derivatives involve contracts between two parties that stipulate speculation on the future price value of a specific cryptocurrency. Regardless of the market price on that day, the parties are obligated to complete the transaction at the predetermined price and time.
In our previous blog post, you may have learned about the meaning, types, and features of a suitable crypto derivatives exchange. The present article focuses on the critical role derivatives play in the crypto economy and why it is an opportune time to invest in crypto derivatives exchange development.
Derivatives offer multiple essential functions in a fully developed financial ecosystem:
• Liquidity FacilitatorsLiquid markets are characterized by high demand and supply of assets. Crypto derivatives help regulate market liquidity, ensuring easy transactions given there are parties ready to transact under specific conditions. Moreover, the increased liquidity in the market makes this asset class more accessible to investors.
• Safe-Haven for TradersWith their inherent volatility, cryptocurrencies involve high risks in trading. However, investors engaged in crypto derivatives trading seek risk mitigation. Derivatives serve as a safety net, safeguarding portfolios from excessive volatility in the crypto asset classes.
• Optimized Price DiscoveryDerivatives enable investors to engage in long or short transactions, facilitating more efficient and smoother market price adjustments. This improved price discovery process results in better price reliability, fewer price shocks, and more confident market participants.
In summary, the importance of derivatives in the economy mandates further infrastructural developments. Consequently, more institutions are expected to engage in crypto derivatives exchange development. For startups or established businesses, now is the ideal time to invest resources and effort in developing crypto derivatives exchanges.
Antier Solutions can help build a crypto derivatives exchange from the ground up and provides market-leading, feature-rich white label crypto derivatives exchange solutions. Connect with our specialists to discuss your business needs.
Relevant Background:
The increasing interest in crypto derivatives exchange development can be attributed to the growth and diversification of the crypto exchange market since 2019, which has a compound annual growth rate (CAGR) of 19.29%. Specifically, the derivatives trading segment is expected to be the fastest-growing, with a CAGR of 25.59% from 2024 to 2029. Regulatory clarity, institutional adoption, and technological advancements also contribute to the rise in crypto derivatives trading.
- The surge in crypto derivatives trading elevates the crypto economy, as derivatives function as liquidity facilitators, safeguarding portfolios from volatility, and optimizing the price discovery process, making it more accessible for investors.
- In light of the anticipated rapid expansion of the derivatives trading segment, with a projected CAGR of 25.59% from 2024 to 2029, it is an opportune time for startups and established businesses to invest in developing crypto derivatives exchanges.
- Antier Solutions, a leading provider in the crypto space, offers comprehensive solutions for building a crypto derivatives exchange, ensuring a feature-rich and market-leading platform for businesses to engage in crypto derivatives exchange development.
