Crypto options trading in a growing market where competition is fierce
Disclaimer: The text below is a press release that is not part of Cryptonews.com editorial content.
- Crypto firms such as Deribit, FTX and Bit.com seek to lead the way in options trading as the market stole the show at TOKEN2049 in Singapore
- Options trading is seen by market participants as an integral part of crypto’s resurgence
- Market participants compete on risk management procedures, collateral and efficient trading processes
Attendees at the TOKEN2049 event in Singapore were told by the organizers that the were the people who would “define what’s next” in the crypto space.
A bold claim, but perhaps an accurate reflection of an industry that needs to reinvent itself after March’s steep decline.
In fact, since the crypto crash, the media has filled thousands of pages and hours of airtime with, for example, the (now clichéd) analysis of the instability of stablecoins and the generally frothy markets of the past five years.
Despite warnings from a number of commentators, TOKEN2049 demonstrated that the media lacks a clear understanding of the decisions that really drive the industry, those that are largely related to how users trade crypto, not what they act.
The increase in offers in the options trading space illustrates this new approach, with options now seen as the cure for lower returns and a hedge against uncertainty in the market’s immediate future.
Nevertheless, the departure in the industry is such that even established leaders within derivatives are struggling to make full use of the increased popularity of options trading.
In addition, much of the delta on investments in the current bear market is low, making trading options a more desirable asset class in an environment characterized by volatility.
The market has been blown open as a result, with various exchanges competing to grab a lucrative share.
Crypto heavyweight Deribit – usually a useful weather vane of market sentiment – is focused on incremental liquidation and off-exchange settlement, what some might call the traditional route. However, other major players in options trading have taken a bolder path:
Bit.com, the full-suite crypto exchange, is a notable example of recent innovation. They have just announced the rollout of ‘USD margin trading’, which allows users to buy and sell cryptocurrency options denominated and settled in US Dollars (USD) or USDC.
To ease the process for their users, Bit.com treats USD and USDC as 1-1, meaning there is no FTX rate between the two. By removing the reliance on UST, the exchange cements flexibility and less risk in its options trading service.
This primarily makes it easier for users to finance their transactions. According to Bit.com Cofounder & COO Lan Yue, USD options trading is also ‘a boon for risk management, as users will put capital into the world’s reserve currency.’
Regardless of the approach, every crypto player who wants to capture a piece of the options trading market will need a solution that covers the following three factors: risk management, efficient trading and the security process.
Improvements in this regard will not only strengthen user loyalty and expand crypto usage, but will also serve as a rebuke to critics of the crypto world’s allegedly inappropriate and lax approach to risk. As if the crypto winter wasn’t a warning shot in that regard.
In sum, therefore, it appears that while the ground may still be moving beneath the crypto industry, a route out of its current doldrums has been identified. Let the fierce competition begin.
