Investors Can Hedge Long-Term Risk With New 2-Year Bitcoin Derivatives

Quedex, a Gibraltar-regulated derivatives trade, lately launched a brand new bitcoin contract with the longest expiration date in crypto.

The CEO of Quedex Bitcoin Derivatives Trade, Wiktor Gromniak, informed CoinDesk the agency had skilled a surge in investor curiosity in its new BTCUSD contract, which expires in December 2021 and solely turned tradeable final Friday.

Quedex volumes surged previous a report $5 million on Saturday, beating the earlier all-time excessive of $2 million reached in February, in line with the trade.

“The brand new December 2021 merchandise account for about 5-15 % of complete quantity on the trade … we see it as comparatively excessive and promising for a product which [has been] dwell for lower than every week,” Gromniak mentioned. “What’s attention-grabbing is that the brand new December 2021 expiry choices are the preferred amongst choices merchandise.”

Quedex’s complete volumes peaked at over $16 million between March 6 and March 13, greater than the trade’s $9.eight million weekly common. Over the identical timeframe, volumes for the Dec 2021 contracts got here in at $1.2 million with most exercise happening on Thursday, the place volumes peaked at almost $900,000, in line with Gromniak.

Working since 2016, Quedex is regulated by the Gibraltar Monetary Providers Fee and presents varied bitcoin-denominated merchandise. In addition to the two-year product, the trade additionally presents contracts with expiries starting from every week, to a month, to 1 / 4. Purchasers can even use a margin buying and selling facility that comes with as much as 10x leverage.

The brand new contract’s launch got here earlier than the coronavirus pandemic triggered mass sell-offs throughout each conventional and crypto markets. Opposite to the broadly held safe-haven narrative, bitcoin’s worth dropped to a 10-month low on Thursday, taking many merchants utterly unawares. Compelled liquidations of lengthy positions on derivatives trade BitMEX have soared previous $700 million, including additional downward strain to the spot worth.

Whereas volatility is more likely to proceed for contracts with quick time period expiries, Gromniak attributes surging curiosity in his longer-dated merchandise to buyers attempting to hedge their long-term publicity. Contracts with longer expiry dates, corresponding to in two-years’ time, usually are not influenced by market downtrends such because the one sparked by the coronavirus, he mentioned.

Beforehand, exchanges OKEx and FTX had the longest-reaching contracts that expired in December 2020. The longest contracts obtainable on Deribit lists expire in September. Gromniak mentioned Quedex would take into account including contracts with even longer expiration dates, however added they might wait to see first if there was enough demand from the market.