Investors Double Down on Derivatives Market as Bitcoin Futures Contracts Hit New All-Time High

Investors in the cryptocurrency ecosystem have doubled down on the derivatives market, an action that is marked by the futures contract in the space hitting a new all-time high.

According to Glassnode, the open interest across major exchanges is currently sitting on the verge of the $20 billion mark, the highest it has ever reached.

Crypto derivatives are secondary contracts or financial tools that derive their value from a primary underlying asset, which in this case is either Bitcoin (BTC), Ethereum (ETH), or other altcoins. Futures are investment contracts that enable an investor to gain exposure to an asset without directly owning such assets. Futures work by letting traders or investors speculate on the future price of an underlying asset.

Futures are a type of derivatives product and the prospects of increased gains have made them quite popular amongst retail and institutional investors in recent years. While the United States laws are still largely ambiguous, wading into the derivatives market has been a better investment option for most corporate firms, who want to take advantage of the asset price volatilities to cart away some gains.

Derivatives and futures trading is a highly specialized market trading that is reserved for professionals; however, with the increasing traction they are currently gaining, derivatives-focused exchanges appear to be in a frantic race to gain a fair share of the market, irrespective of the qualification of the trader involved.

Per the Glassnode data, the open Interest in exchanges offering derivatives or futures products has been on a steady uptrend since September 2020, to date. While the growth has been consistent, there was a sharp correction to the uptrend in February 2021, the exact period when Bitcoin hit its all-time high. 

The current uptrend is an indication that the crypto market is healthy across the board with investors aiming to tap into every aspect of innovation in the industry.

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