“The cryptocurrency derivatives market has evolved over the past few years, and this presents plenty of market opportunities for retail traders,” says Marcus Fetherston, Head of Operations at Eightcap.
The cryptocurrency market has significantly changed investment vehicles over the past decade, more so during the past few years following the introduction of crypto derivatives. Consequently, traditional assets like shares trading and currency forex trading have significantly lost touch among most retail investors since the growing popularity of the cryptocurrency industry. Now, crypto is rising to be arguably one of the most liquid and lucrative markets and has presented various opportunities for derivative traders to speculate on both rising and falling prices.
As crypto becomes widely accepted, the question has to be asked – are traditional assets going to make less of an appearance in a traders portfolio? If we look at traditional investments such as Gold, this precious metal has been regarded as a valuable and tradeable asset for thousands of years. Gold is considered a safe haven that many investors flock to when the global markets are in trouble. However, now it could be argued that derivative traders are looking to profit in a highly volatile market going forward.
We spoke to Eightcap’s director of operations, Marcus Fetherston, to understand his perspective on the increasing popularity of cryptocurrency and if traditional assets are going to be overtaken by digital assets. The award-winning broker, Eightcap, offers over 1000 financial instruments to its clients, including Forex, Indices, Shares, Commodities, ETFs and Cryptocurrency CFDs. The global derivatives provider has seen crypto derivatives rise to the forefront of traders’ portfolios over the recent years, and due to this, the crypto derivatives market has thrived.
“The crypto derivatives market has evolved over the past few years, and this presents plenty of market opportunities for retail traders. The crypto market undergoes frequent intraday price movements compared to traditional assets, allowing derivatives traders to make the most out of both rising and falling prices,” says Fetherston.
A Closer Look at the Cryptocurrency Derivatives Market
The crypto industry has experienced a tremendous rise in daily traded volume in the past two years. However, as there are numerous transactions made across different exchanges, smaller trades could potentially significantly impact market movements.
This is why crypto derivative traders will actively seek a provider that can offer them improved liquidity due to the large bouts of volatility in the crypto market. With Eightcap, crypto derivative trades are executed quickly and at a much lower cost than other derivative providers.
Several correlations exist between the cryptocurrency market and more traditional markets such as forex. One notable similarity is the effect macroeconomics has on financial markets. It’s been known that political and economic issues have a subsequent knock-on effect on the foreign exchange market. One example is a shift in monetary policy, such as high inflation reports and the rise of interest rates. Cryptocurrency is now also seeing fluctuations in price to reflect broader economic changes. Derivative traders are keeping a close eye on Bitcoin due to the latest statement from the FOMC. The Fed has stated that it would hold its interest rates near zero, and the central bank is fully intent on reducing its stimulus-led balance sheet by a substantial amount. Like traditional assets such as Gold and FX, the current news has crypto investors and traders on alert. Some analysts believe that Bitcoin could be an inflation hedge during macroeconomic events.
Fetherston comments on whether cryptocurrencies will surpass the popularity of traditional assets:
“Cryptocurrency has been in the spotlight in more recent years, and that won’t change anytime soon. However, that’s not saying traditional assets will become a thing of the past. I think cryptocurrency will become increasingly popular, even more so than now, especially with the innovations occurring in blockchain technology. Still, traditional assets will always be seen in an investment and CFD portfolio. Interest in conventional instruments won’t just subside as too many factors and events move those markets.
“There is also a while to go till crypto is adopted on a global scale. There are hurdles that the cryptocurrency industry still has to overcome. One would be regulation and a framework that works in favour of those investing in the industry. At the moment, we have some players in the market that offer a good suite of crypto derivatives, but they aren’t reputable providers that are regulated in multiple jurisdictions. That’s why at Eightcap, we ensure that we adhere to stringent KYC measures. We are regulated by the Australian Securities and Investments Commission (ASIC), the Financial Conduct Authority (FCA), the Cyprus Securities and Exchange Commission (CySEC) and the Securities Commission of the Bahamas (SCB). This gives our clients the peace of mind that they are trading with a derivatives provider that can be trusted.”
Finding the best crypto derivative provider is critical for retail traders who seek transparency within a highly liquid market. Eightcap was founded in 2007 and since then has rapidly expanded to offer derivative products to traders worldwide. Eightcap has won numerous awards over the years, the most recent being Best Crypto Broker at the AtoZ Markets annual awards.
“We were recently named the Best Crypto Broker at the 2021 AtoZ Markets annual awards for our extensive range of cryptocurrency derivatives. We offer over 250 crypto derivatives, including altcoins, crypto-crosses and crypto indices. Our clients can get started with as little as $100, and we also offer multiple funding and withdrawal options such as PayPal, BTC, Tether, Neteller, Credit/Debit card, Skrill and more. Also, we make certain that we provide an array of educational tools and resources that meet the needs of both beginners and experienced crypto derivative traders,” Fetherston highlighted.