Crypto Derivatives

Question 1

What was the first crypto derivative introduced?

Who offered them?

Answer 1

Bitcoin futures

1) CME
2) CBOE

Question 2

Why did the CBOE stop offering bitcoin futures?

Answer 2

Lack of volume given the price fall observed late 2017

Question 3

How did CME and CBOE differ in their BTC future pricing?

Answer 3

1) CME Used 4 exchanges
2) CBOE only used 1 (fears of price manipulation given dispersion between pricing on exchanges)

Question 4

What did some attribute BTC futures to doing? Why might this not be true

Answer 4

Causing the fall in BTC by allowing bearish investors to speculate against price falls.

Only a small nominal value traded so unlikely to have had a material effect

Overall the uptake of BTC futures was very thin

Question 5

Why was the uptake of BTC futures thin?

Answer 5

There was no need for instituional investors (for whom the products were targeted to) to hedge against changes in the price of bitcoin

Question 6

Why might you consider the crypto market itself a derivative market?

Answer 6

Many popular coins are derivatives of the price of bitcoin