Here’s Another, Surprising Reason Why Crypto Prices Fell – Derivatives

The traditional markets’ recent sell-off drove cryptocurrency prices down, but the way it did so was more complicated than even many of the most sophisticated players in crypto were able to grasp. That’s because crypto’s drop was staged in the derivatives markets.   

Financial instruments like futures and options make up derivatives markets, where value derives from, and is dependent on, the value of an underlying asset, in this case cryptocurrency. Coupled with a massive sell-off in the cryptocurrency markets, derivatives also contributed to recent declines in price.

In just 48 hours from March 7 to March 9, bitcoin (BTC) fell 17 percent from $9,215 to a fresh two-month low of $7,628. 

As the S&P 500 tumbled 7 percent Monday, traders took to selling, not buying, crypto to deal with their own cash shortfalls. 

“The crypto industry is reacting to the traditional market dump,” said Mostafa Al-Mashita of Secure Digital Markets, a Canadian crypto brokerage firm.

The…