Times are changing rapidly. Oil has now overtaken Bitcoin for price volatility. FTX has launched oil future contracts that are pegged to the West Texas Intermediate, plus $100. This Binance-owned crypto derivatives exchange, FTX, has introduced oil futures. The move was inspired by the recent record crash in the United States oil prices. The oil prices fell to -$40 on April 20.
FTX’s contracts will expire at the spot price of West Texas Intermediate, or WTI, plus $100 to protect against negative settlement prices. The exchange highlights that should the spot price of oil drop below -$100, “FTX OIL contracts “can theoretically expire negative.”
FTX Launches Crypto-Based Oil Contract Trading
FTX has a top-10 ranked Bitcoin (BTC) futures exchange by both open interest and volume. This Binance-owned exchange is the biggest to provide crypto-based oil contract trading. The contracts are not in any way available to account-holders who reside in or with an IP address in Canada, the United States, or several other verboten locations.
Oil’s Volatility Surges Past Cryptos
Despite being famous for their volatility, cryptos have paled off in comparison to the price swings that are posted by WTI since March.
These contracts are scheduled to trade until settlement, even in the cases where they are settled after the expiration date has expired.
Derivative Volumes Surge in 2020
The Q1 2020 saw a record trade volume that was posted by the cryptocurrency derivatives sector that is driven by the new market entrants, FTX and Binance. A report that was published by CryptoCompare earlier this month which this month is estimated that the combined market share of FTX and Binance surged from 14% in January to 22% in March when the crypto market crashed violently.
Binance enjoyed the biggest volume among the derivatives exchanges. It recorded $2.8 billion in futures contracts changing hands in the wake of the massive sell-off.