How do people invest in crypto without buying cryptocurrencies
A short study on the demand for CFDs (Contracts for Difference trading)
By Percy Venegas www.EconomyMonitor.com
During these days of hardforks in bitcoin and regulatory crackdowns across the board, investors with low risk appetite look for alternatives to limit their exposure to crypto, while still benefiting from the volatility gains that those events bring. In traditional trading, Contracts for Difference (CFD) help to reduce exposure to fees, regulation, commissions and high capital requirements. While in Ethereum some of these overheads are negligible (e.g. Ether can be mined, and the regulatory framework is still in flux), and although CFDs are not generally considered suitable for buy-and-hold trading or long-term positions (large intra-day differences in spreads can be really damaging), studying the demand trends for ETH CFDs can help understanding the evolving risk tolerance of the market.
A demand index for a popular online CFD vendor is shown. The vendor offers multiple products, including indexes, stocks and cryptocurrencies. By inspecting the signal it is apparent that there is seasonality (weekends have less activity), but it appears as well that there is a trend building up with increasingly higher activity on weekends…
