What Traders Need to Know in 2025

Cryptocurrency, or crypto for short, has opened up a whole new world for traders in 2025. What started out as an obscure alternative currency project has quickly become a household name, and the offerings surrounding crypto have grown exponentially. While traders and investors who first got into crypto would have to handle assets like Bitcoin or Ethereum directly, now investors can take advantage of crypto ETFs, crypto trusts, and even crypto derivatives. But if you’re new to investment vehicles like crypto derivatives, you might not know exactly what these are, how to incorporate them into your investment strategy, or what you should be wary of when you first get started in crypto derivatives. Here’s everything you need to know about crypto derivatives in 2025 that will allow you to start putting your money in them with confidence.

What Are Crypto Derivatives?

Crypto derivatives are contracts that derive their value from the underlying asset, such as, most popularly, Bitcoin. Crypto derivatives come in the form of various investment vehicles such as crypto futures, crypto options, crypto swaps, and perpetual contracts. Generally speaking, when you’re investing in crypto, you purchase a certain amount of the asset you’re most interested in, wait for the price to go up, and then cash out before the price goes back down. You then rinse and repeat this process to continue profiting off of your investments. However, crypto derivatives act a bit differently, given that you’re not investing directly in the assets that you’re interested in profiting off of as you would if you were to, say, trade on a crypto exchange.

In the case of crypto options or futures, you’re purchasing crypto derivatives with the hopes that the underlying asset will rise in price by the time it comes to buy the specified amount of cryptocurrency in your contract. If your speculations are correct and the price rises, you then make a profit as you locked in a specific price when you first invested in the crypto derivative. In the opposite manner, you could choose to sell at a certain date, making a profit should the price of the asset fall and you lock in a more desirable strike price. Perpetual contracts are specific to cryptocurrencies, and, as the name suggests, never expire, giving traders the ability to hold a position indefinitely so long as it meets certain requirements.

If you’re familiar with options or futures, you’re familiar with many crypto derivatives. The only new ones you may need to become more acquainted with are perpetual contracts (which act like futures but don’t have a predetermined expiration date) and swaps (in which cryptocurrency swaps or currency to cryptocurrency swaps are conducted). Taking the time to learn more about the various crypto derivatives at your disposal is essential to making sure that your money is being invested properly.

What Are the Benefits of Crypto Derivatives?

So, what are the benefits of crypto derivatives? Many of the same benefits that apply to futures and options also apply to their crypto counterparts. These include:

• Crypto derivatives allow you to “bet” on cryptocurrency without actually having to invest in any of it yourself. This allows you to take advantage of the volatile price movements happening within the market without having to go all-in on the assets themselves. Better yet, this can shield you from the challenging tax laws that govern cryptocurrency, which can often take more out of your profits.
• You can engage in leverage trading with crypto derivatives. This allows you to buy in with a minimal amount yet still reap the large gains that can come from crypto futures or crypto options. Just remember that leverage trading as well as investing in crypto derivatives could go wrong without the proper research or education. Taking the time to learn more about leverage trading can make a world of difference in the outcome of your money moves.
• While profitability is one focus, hedging against risk is also a notable benefit that you’ll want to take advantage of as you add new assets to your investment portfolio.
• Crypto derivatives have much higher liquidity than spot trading, making it easier for you to buy or sell instead of potentially finding yourself in a uniquely difficult position where you’re unable to do either.

Put simply, crypto derivatives have become an offering in the market because they offer benefits that cryptocurrency alone is unable to satisfy. If cryptocurrency is an asset that has intrigued you but you’re not entirely sold on purchasing various amounts of crypto for yourself and handling it all on your own, consider crypto derivatives as a viable alternative to buying cryptocurrencies outright. It might save your wealth!

Why Crypto Derivatives Over Trading Crypto 2025?

We’ve taken a look at some of the reasons why some would choose crypto derivatives over actual cryptocurrency assets above. Most notably, handling cryptocurrency assets can come with a wealth of downsides. If you deal with crypto on your own, you’re subject to taxation laws that can quickly eat into the profits you see, making it harder to make the money you want off of cryptocurrency. But more than that, your money is going to be held on an exchange. Crypto exchanges, while better now than in the past, are not faults. Putting your money into a cryptocurrency exchange means that it could be hacked or stolen. While some of it may be FDIC insured, not all of it may be, and cryptocurrency transactions are irreversible once those transactions are sent out. Cryptocurrency exchanges can sometimes be down during the most profitable points, and you can always risk investing in a non-popular asset that fails to take off.

Choosing crypto derivatives over cryptocurrency shields you against a wealth of these issues, allowing you to participate in the cryptocurrency craze without taking on as much of the risk that’s present when you have to invest in various cryptocurrencies directly.

Tips to Make the Most of Crypto Derivatives in 2025

If you are interested in investing in crypto derivatives in 2025, do your research, take the time to understand how the market functions now historically, and become familiar with leading assets such as Ethereum and Bitcoin. The more research you do, the more you’ll be able to understand how to use crypto derivatives to your advantage, and the less likely it may be that you’ll be blindsided by market developments that could potentially wipe out your investment. Keep in mind that the crypto market is rather new, so you always run the risk of losing money anyway should it crash. Never invest more than you are comfortable losing!

Crypto derivatives are a great way to profit from crypto gains without buying crypto yourself. Whether you’re interested in crypto options, crypto futures, crypto swaps, or perpetual contracts, use the guide above to learn more about what crypto derivatives are, what the benefits of investing in crypto derivatives are, and how you can avoid making mistakes that put your wealth at risk. As long as you take the time to research the assets and derivative types you’re most interested in, you should be able to invest confidently and see the gains that you’re hoping for (or hedge against losses).