Huobi is one of the largest exchanges in the world and Binance’s main competitor. 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 derivatives of cryptocurrencies had not been very developed. Something that could start to change now that Huobi Futures launches its Bitcoin options today.
The importance of Bitcoin options
The bigger the crypto market gets, the greater the needs of its investors. Which are no longer satisfied with simply buying and selling cryptocurrencies on an exchange. Rather, 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.
And, the options essentially consist of the right to buy or sell a financial asset at a specific price on a scheduled date. Thus, upon reaching the expiration date of the contract, the owner of the option has the possibility of buying or selling (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 just an option, a right that the owner of the derivative product has to carry out the action if he so wishes.
Therefore, it is understood that these types of products provide many possibilities to investors. Which is why they are quite sought after in traditional markets. And for some time, also within the cryptocurrency market, with Bitcoin options like those launched by Huobi Futures now, being quite popular.
Huobi Future rides the wave
Thus, through an announcement on its platform, Huobi has reported the launch of its own Bitcoin options. With which it would seek to enter this increasingly important sector of the market. Strengthening its own derivatives platform to compete with giants like Binance Futures, its main rival.
Huobi Futures’ Bitcoin options would then come at a time when the cryptocurrency derivatives market has grown by 32% since the start of the pandemic. Reaching an all-time high of $ 602 billion. While traditional exchange transactions have only grown by 5%, according to data from Cryptocompare. So, as Huobi Vice President Ciara Sun put it:
«As investors prepare for prolonged economic uncertainty in 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 business products (…) Our new options are launched in response to market demand and this new economic reality«.
Huobi’s options will be USDT-based, and will be offered on a weekly, bi-weekly and quarterly basis. Based for its operation on the European system of options, which limits its execution to the expiration date. In this way, Huobi Futures could begin to cut back on Binance Futures, and initiate a more aggressive strategy in the important crypto derivatives market.