What Are Crypto Derivatives? Types, Pros and Cons – Forbes Advisor INDIA

Understanding Crypto Derivatives?

Crypto derivatives are financial instruments that derive their value from underlying crypto assets. Traders place their bet based on speculation of the price movements of crypto tokens, and can choose to either sell or buy the asset. The transaction can either happen through physical delivery of crypto tokens, or directly through cash settlement into the trader’s account without owning the asset.

Being a high-risk financial instrument, advanced traders can heavily maximize gains from crypto derivatives. However, the crypto market is extremely volatile and derivatives can have the opposite effect due to fluctuation on price movements—making their…