BitGo outlines institutional use cases and key risks in crypto derivatives
BTGO•BitGo published an analysis of how institutions use crypto futures, options and perpetuals to hedge risk, manage volatility and gain synthetic exposure, while highlighting counterparty, liquidation and regulatory risks.
1. Uses and risks
BitGo’s analysis described futures, options and perpetual futures as instruments with different settlement structures, costs and risk exposures. It said perpetual futures can support indefinite hedges, with funding rates typically charged every eight hours as the main ongoing cost, and flagged counterparty risk, leverage-driven liquidation risk and regulatory uncertainty as constraints on institutional adoption. Bitcoin derivatives were cited as a common entry point because they have higher volumes and tighter spreads than other digital assets.
