In 2024 cryptocurrencies will bring innovative products

In the 2017 bullish boom, Initial Coin Offerings (ICOs) captured the attention. In the last bull market of 2021, Decentralized Finance (DeFi) and yield farming dominated the scene. Now, with a new bullish cycle underway, 2024 promises the arrival of more sophisticated financial products in the field of cryptocurrencies. From complex derivatives to structured products, this year will mark the entry of advanced financial instruments and high-end traders into the fascinating world of digital assets.

Following the trend of previous cycles, the crypto ecosystem continues its close relationship with the traditional financial market (TradFi). Bitcoin, originally designed as an alternative payment system, and ICOs, inspired by TradFi’s Initial Public Offering (IPO) of 1783, are clear examples of this connection.

Meanwhile, the DeFi ecosystem replicates traditional financial services, such as lending, borrowing, and yield generation, but in a decentralized manner. It is logical to expect that, eventually, the more complex financial vehicles will experience an update on the Web3.

The crypto derivatives market has experienced impressive growth, with trading volumes reaching record numbers in November. Although the share of the overall crypto market has declined, open interest in crypto options has reached historic levels, evidencing a trend towards more sophisticated derivatives.

Alongside this recovery, more advanced derivatives are emerging, such as the boom in decentralized perpetual futures trading and innovative risk management mechanisms. In the new year, growth is expected in exotic options, structured products and covered debt bonds (CDOs) in the crypto space, signaling a significant expansion.

What will drive interest in these innovative derivatives? Three key factors stand out for 2024 and beyond. First, growing institutional interest in digital assets will drive demand and innovation. Second, after the crypto winter, investors will look for high yields, focusing on derivatives and structured products because of their potential for high yields and loss protection. The third factor is the search for security after destabilizing events in the crypto market in 2022, making capital-protected products attractive.

As the crypto market matures and the focus is on predictable returns, structured products and complex derivatives will play a crucial role. Preserving capital becomes a priority in a market that is still recovering from the events of 2022, driving innovation and rapid growth in these areas, marking one of the defining innovations of the current bull market.

K. Tovar

Source: Cointelegraph

(Reference image source: Kanchanara, Unsplash)

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