Learn From Smart Money: Observing Market Sentiment From Derivatives Data

Derivatives trading has been an important part of the broader crypto economy and the most important price discovery venue for cryptocurrency, especially for blue chips like BTC, ETH and SOL. Professional traders and institutions have been using futures and options as part of their portfolios to hedge their positions, improve the execution of their strategies and potentially increase the profitability of their portfolios. 

Most participants in the cryptocurrency derivatives markets are professional traders (or as some may call them, smart money) who are often at the forefront of crypto trading.. Observing the derivatives markets by constantly examining the relevant data could provide valuable insights into how these professional traders see the market.

In this article, we’ll provide a practical overview of derivatives trading data and explain how an everyday trader can extract actionable information from this data. By discussing how this data can help us make more informed trades, we aim to equip traders with the tools they need to navigate the market effectively.