BLOOMBERG: INVESTORS AND MINERS ARE TRYING TO SURVIVE THE “CRYPTOCURRENCY WINTER” DUE TO DERIVATIVES

Cryptocurrency investors and miners are turning to derivatives, including options, in an attempt to survive a protracted recession in the market, according to Bloomberg.

The article describes the growing popularity of complex trading instruments, as well as how difficult it is for industry representatives to cope with the consequences of the “bear” market, which has become the longest in the history of the industry.

With the emergence of many experienced financial professionals who enter the digital asset market, the range of complex trading instruments has become more diverse. As an example, Bloomberg cites the move of Singapore-based cryptocurrency trading firm QCP Capital, which reported that the company recently purchased a three-month option for a nominal amount equivalent to 250 BTC (~$900,000).

The exercise price of the specified contract, was reportedly set at $4 200, so if bitcoin will trade below that level at the time of expiry of the contract, the contractor QCP will receive a prize of $666 250 and will maintain their assets in BTC. If, on the contrary, by April bitcoin will be trading above $4,200, the counterparty will have to sell its 250 BTC at this price, abandoning the expected profit.

Given the fact that many of these derivative contracts are private bilateral contracts, as Bloomberg notes, there is not much official statistics. However, the miners most affected by the fall in market prices have become one of the main sellers of a derivative instrument similar to the coated option.