Huobi is one of the most important exchanges in the world and the main competitor of Binance. Having the base of its business in the Asian market, where it occupies a privileged position. However, until now, its platform dedicated to transactions with products derived from crypto currencies had not been very developed. Something that could start to change now that Huobi Futures is launching its Bitcoin options today.
Interest in Bakkt futures contracts increases
The importance of Bitcoin options
The larger the crypto market becomes, the greater the needs of its investors. They are no longer satisfied with simply buying and selling crypto currencies on an exchange. They are looking for more sophisticated investment products, which allow different trading strategies. Among which the options are among the most sought after, as Huobi knows well.
Options are essentially the right to buy or sell a financial asset at a given price on a given date. Thus, when the expiration date of the contract arrives, the owner of the option has the possibility to buy or sell (depending on the type of option acquired) the asset at the previously established price.
Being therefore a very similar product to future contracts. Differing only in that while the contract is a purchase-sale obligation, the option, as its name indicates, is only an option, a right that the owner of the derivative product has to perform the action if he so wishes.
Therefore, it is understood that this type of product provides many possibilities to investors. This is why they are quite sought after in traditional markets. And for some time now, also within the crypto market, with Bitcoin options such as those launched now by Huobi Futures, being quite popular.
CME Group is the third largest Bitcoin futures exchange
Huobi Future is riding the wave
Thus, through an announcement on its platform, Huobi has informed of the launch of its own Bitcoin options. With which he would seek to enter this increasingly important sector of the market. Strengthening his own platform of derivative products to compete with giants like Binance Futures, his main rival.
Huobi Futures‘ Bitcoin Trader options would then arrive at a time when the market for derivatives on cryptosystems has grown by 32% since the beginning of the pandemic. Reaching an all-time high of $602 billion. While traditional exchange transactions have only grown by 5%, according to Cryptocompare data. Therefore, as expressed by Huobi Vice President Ciara Sun:
„As investors prepare for prolonged economic uncertainty in the global financial markets, the influx of institutional capital and other forms of ’smart money‘ in digital assets such as Bitcoin is driving increased demand for more diverse commercial products.
Huobi’s options will be USDT-based, and will be offered in weekly, bi-weekly and quarterly modalities. They will be based on the European option system, which limits their execution to the expiration date. In this way, Huobi Futures could start to cut back on Binance Futures, and initiate a more aggressive strategy in the important crypto derivatives market.