Listen, you know how everyone in the crypt is chasing profits, but not everyone understands that you can earn money even without buying the crypt itself. Seriously. To do this, they came up with cryptocurrency derivatives. Let me explain to you how they work, in simple language, without abstractions.
What is it anyway?
A derivative is a contract that allows you to bet on where the price of a cryptocurrency will go in the future. You don't even have to keep the crypt itself. You just negotiate with someone: "In a month, the cue ball will cost so much." If you're right, you've earned it. If I made a mistake, I lost it.
It's like booking a car from a dealer at the old price, and then when the price goes up, you get it cheaper than the market. It's the same logic.
What are derivatives?
Look, there are two main types:
Futures — a contract with a specific execution date.
Perpetual futures have no expiration date, but there are such small payments (financing) so that the price does not significantly break away from the market.
As of now:
Open interest (that is, how much money is in the game) on regular futures is $3.45 billion.
For indefinite loans — almost $791 million.
But over the past month, interest in perpetual derivatives has skyrocketed by $823 billion! And the classic ones have lost ground a bit. So the market is voting for flexibility.
And why all this?
Hedging — for example, you have a mining farm. You're selling futures now to lock in profits. Even if the exchange rate drops, you've already sold everything at a bargain price.
Speculation — you've opened a one-way deal and you're waiting for the price to move. Moreover, you can earn even on a fall by opening a short.
Leverage — you can trade more amounts than you have. But here it is important to understand: It's not magic, it's more of a risk.
What exactly can be traded?
Here is the list of tools:
Futures are classics with a due date.
Perpetual futures are like futures, only without a date.
Forwards are similar to futures, but they are custom and off—exchange.
Options give the right, but not the obligation, to buy/sell an asset.
CFD — you trade the difference in price, you don't need the asset itself.
Swaps are already from the category of advanced mathematics, not for beginners.
And what are the advantages and pitfalls?
Positive:
You can earn money in both directions (both on the rise and on the fall).
You protect your portfolio from collapses.
More opportunities with small capital.
The liquidity is high — transactions are fast.
Minuses:
Volatility is high — the market can turn against you sharply.
The shoulder is a double—edged sword. You can lose everything.
You need to understand margins, liquidations, and risk management.
Platform risks: the exchange may "crash" or freeze funds.
And what is the result?
Derivatives are not toys. They provide great opportunities, but they require understanding. It is better for a beginner to work with a spot first (a regular purchase of a crypt), understand the market, and then try derivatives. Especially if you want to get into trading with leverage.
With good understanding and experience, it is a powerful tool. You can earn money, protect your portfolio, and act flexibly.
Now tell me honestly:
Would you try such contracts or would you prefer to just hold the cue ball and not bother?
