Definition ∞ Derivative trading involves exchanging financial contracts whose value is determined by an underlying asset, index, or rate. These contracts include futures, options, and perpetual swaps, allowing participants to speculate on future price movements or hedge existing positions. Traders do not directly own the underlying asset but gain exposure to its price fluctuations. This activity carries inherent leverage and risk.
Context ∞ Derivative trading holds a significant position in cryptocurrency markets, providing tools for price discovery and risk management. News often reports on the volume and open interest in crypto derivatives, which can indicate market sentiment and potential future price volatility. Regulatory discussions frequently focus on the oversight of these products to protect investors and maintain market integrity.
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