Crypto market volatility: digital derivatives to the rescue

The coronavirus has in every way possible exposed the crypto market volatility. The world’s economy has always suffered big blows whenever the globe witnesses crises as big as Covid-19. On the one hand, disasters like this have often birthed accelerated innovations. The fintech industry hasn’t been an exception in any of these. Companies are fast-tracking the innovation and development efforts of their businesses, to help them effectively cushion the effects of multiple dimensions, including inflation.

Economic crises crises and crypto market volatility

We may witness the world’s GDP shrink by 0.9 percent in 2020, as a result of Covid-19. Two fundamental questions, however, beg for answers, with both pointing to cryptocurrencies. First, in what ways can the ordinary person ensure the safety of their financial savings, against the forthcoming swings in value or the fiat currency that’ll follow this economic downturn?

The next question begging for answers would be, what alternative investment opportunities are available, in the wake of traditional markets facing massive downturns, interwoven with an utterly unpredictable tomorrow.

In the wake of the Covid-19, the world witnessed prices of Bitcoin plunged by 43 percent of its market value within 24 hours. Shortly after, Bitcoin, however, saw a reasonable increase in prices. The Bitcoin experience is a reminder of the crypto market volatility that can affect cryptocurrency, as seen with the other traditional markets.

Cryptos hold growth potential

Bitcoin prices have regained its pre-COVID-19 prices, but the real impact is on the performance of its derivatives. Derivatives are contracts signed by two or more parties to buy and sell crypto assets at specific prices. Prices of assets may, however, change with time. The derivatives include future options and tradable index.

Most cryptocurrencies exchange platforms have joined the derivative field and launched future trading options. It presents cryptocurrencies with enormous possibilities for growth when compared to the traditional market. Predictions suggest that crypto derivatives will continue to grow in the wake of distrust of the conventional market, and help to cushion the crypto market volatility.