I believe that the last few days should make it very clear to most people about how closely crypto in now tied to assets in which it once sought out to replace. Crypto is now tied to ETFs, stocks (aka companies that hold major asset wealth within them) along with governments now stockpiling it. it's also heavily tied to stablecoins in an increasing capacity which is now held by banks and other traditional finance options.
Crypto once set out to to replace all of this born out of a corrupt system which was minor compared to todays standards. It truly feels that while we got mass adoption what is the true price we all just paid?
It feels like ages since I last wrote about RWAs (Real World Assets) and we are getting closer and closer to all of that becoming more mainstream. Things like real estate, stocks, bonds etc are all now able to be traded with crypto (in particular for the most part stable coins.
RWAs I believe are still the future and it's going to streamline a lot of things. However we are still years away from major inception and what's wild is the Binance once jumped the ball on this and got into some major heat over it. Now it's being sought after. Bonkers I tell ya, just bonkers
When you step back and take a look at stable coins like USDC and USDT it's the weirdest thing ever. What was once fully attacked by governments is now being embraced and the weird thing is there's not money printer it's a digital printer where someone can just type in a number and instantly $1,000,000 gets generated for Coinbase to loan out or another bank or institution.
This is where I believe we will see one of the strongest futures for crypto and it's only just getting started. If you're unsure of what derivatives are think of them as futures contracts, options, swaps and forwards. Most of us know swaps for the most part where tokens are swapped for another and a small fee is collected. As markets heat up and more assets come online people are going to need to be able to swap blockchain assets and will happily do it for little fees. It's far easier to swap and pay $5 fee for $100,000 then trying to do that with some bank lol.
This is where I believe we will see a lot of movement in terms of miners as prices move higher. Someone mining bitcoin might be doing it via a pool and expect to sell it in 3 months. They can lock in the price they want for it now and someone is willing to pay for it in 3 months now so when the bitcoin is mined and the contract comes due the miner would fulfill it. This helps miners have a more steady income knowing they will be getting those funds.
There are other types though as well such as Perpetual futures aka Perpetual swaps. These are unique to the crypto space and have no expiration date. They work by relying on a funding mechanism and make up a lot of the volume that happens. Exchanges such as Binannce, Bybit and BitMEX have made them popular.
At the moment over half of the trading that happens in the crypto space is in derivatives and this is expected to only continue to grow to new levels. This will include crypto even more closely into every day assets as a way to truly speed up the entire economic sectors.
What derivatives are you currently using or look forward to?
