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Huobi launches derivative market, Huobi DM

Posted: 29 November 2018 6:54 pm
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A new way of hedging against risks, or taking additional risks, depending on how you roll.

The Huobi cryptocurrency exchange has launched the Huobi Derivative Market (Huobi DM), CoinTelegraph reports. The move aims to allow traders to bet on both rising and falling crypto prices, and unlock tools for hedging against risks and managing the uncertainties inherent to trading in the crypto, and any other, markets.

Volatile times

It was also announced when the crypto markets have returned to their more volatile norm after a period of extended quietude, and they might attract a lot of interest. As with other futures trading, Huobi will essentially let people buy and sell cryptocurrencies at a set price at specified times in the future.

The futures trading platform is currently in beta, Huobi notes, and is not yet availalable for customers in the US, Singapore (Huobi's home base), Hong Kong and others. The development comes right as Nasdaq announced its own intention to push ahead with cryptocurrency derivatives, despite the ongoing market carnage.

On the whole, the returned volatility might have significantly increased the demand for hedging solutions like bitcoin derivatives, as well as a new way of profiting from the additional ups and downs in the crypto markets.

BitMEX, perhaps the world's best known crypto derivatives platform, has been doing roaring business through the rises and falls of the crypto markets, and it's reasonable that other exchanges in both the crypto and traditional finance worlds might want to a piece of the action.

CME and Cboe, the earliest traditional finance entrants to the bitcoin derivatives scene, might not have had quite as much interest though. They arrived in January near peak market hype, and saw a lot of uptake initially but interest may have waned over the following year.

Futures trading is widely regarded as an important part of any mature market though.

"Traditional investors, both institutional and retail, want trusted, guided routes into the crypto market and futures provide an approachable introduction, allowing them to bet on future prices without having to actually buy the asset. I foresee sustained interest building in this area in the months ahead," said INVAO CEO and cofounder Frank Wagner.

But despite the positivity that might be associated with wider access to futures trading, it might not be welcome everywhere. It's been theorised that futures trading punctured the bitcoin bubble, although it's perhaps not quite as cut and dried as the ability to bet against bitcoin contributing to sagging prices.

One might also critique the introduction of futures contracts as undermining the technology's potential and further reinforcing its position as a purely speculative asset rather than something more potentially useful. Of course, practical crypto applications and speculative futures contracts aren't always mutually exclusive.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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