Disclaimer: The text below is a press release that is not part of Cryptonews.com editorial content.
Attendees at the TOKEN2049 event in Singapore were told by organizers that they were the people that would ‘define what’s next’ in the crypto space.
A bold claim, but perhaps an accurate reflection of an industry that needs to repurpose itself after March’s precipitous fall.
Indeed, since the crypto crash, the media has filled thousands of pages and hours of airtime with, for example, the (now cliché) analysis of the instability of stablecoins and the generally frothy markets of the past five years.
Despite the warnings of numerous commentators, TOKEN2049 demonstrated that the media lack a clear understanding of the decisions truly driving the industry, those which are largely related to how users trade crypto, not what they trade.
The surge in offerings in the options trading space epitomizes this new approach, with options now seen as the cure to lower returns and a hedge against uncertainty in the market’s immediate future.
Yet such is the rate of churn in the industry that even established leaders in derivatives are struggling to fully capitalize on 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 different exchanges competing to capture a lucrative share.
Crypto heavyweight Deribit – normally a helpful weathervane of market sentiment – is focused on incremental liquidation and off-exchange settlement, what some might call the traditional route. Other big players in options trading, however, have struck out on 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’, allowing users to buy and sell options in cryptocurrencies which are denominated and settled with US dollars (USD) or USDC.
To ease the process for their users, Bit.com is treating USD and USDC as 1-1, meaning there is no FTX rate between the two. By removing the reliance on UST, the exchange is cementing flexibility and less risk into its options trading service.
This makes it easier for users to fund their trades, first and foremost. According to Bit.com Cofounder & COO Lan Yue, USD-options trading is also ‘a boon for risk management, as users will be posting capital in the world’s reserve currency.’
Whatever their approach, every crypto player seeking to take a slice of the options trading market will need a solution that covers the following three factors: risk management, efficient trading, and the collateral process.
Improvements in this regard will not only bolster user loyalty and widen crypto use, but will also serve as a rebuke to criticisms of the crypto world’s alleged impropriety and lax approach to risk. As if the crypto winter wasn’t a warning shot in that regard.
In sum, therefore, it would seem that while the ground may still be shifting under the crypto industry, a route out of its current doldrums has been identified. Let the fierce competition begin.
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