Digital Assets

The market at a glance

Digital assets went from whitepaper (2008) to a multi-trillion-dollar asset class with spot ETFs, CME futures and institutional custody in fifteen years — the fastest financialisation in history. The core remains concentrated: Bitcoin and Ether carry most of the capitalisation; thousands of smaller tokens trade behind them with venture-style risk.

Structurally it is two markets in one: a crypto-native layer (24/7 global exchanges, perpetual futures, on-chain settlement, self-custody) and a TradFi layer (ETFs, CME, regulated custody) — increasingly arbitraged together by basis traders. Volatility remains the defining feature: 50–80% drawdowns are cyclical routine, and everything from position sizing to option pricing must start there.

Crypto's genuine financial invention

The perpetual future — an expiry-free future tethered to spot by a funding rate paid between longs and shorts every few hours — is the asset class's real contribution to financial engineering. Funding is simultaneously the price of leverage, the market's sentiment gauge, and a harvestable yield. The calculator below turns a funding print into annualised numbers — the arithmetic behind the "cash and carry" trade that anchors crypto's term structure.

Interactive: funding-rate carry calculator

Translate a perp funding rate into annualised yield — what a delta-neutral basis trade (long spot, short perp) would collect while the rate persists.

Funding per 8h % Position size $k

Simple APR

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Compounded APY

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Daily income on size

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Funding flips sign and mean-reverts violently; annualised numbers assume persistence that rarely lasts. Exchange counterparty risk is the strategy's true price — FTX taught that lesson at scale.

How the products fit together

Spot is ownership — and custody is half the analysis. Perpetuals carry the leverage and price discovery. Options price the turbulence (with two-sided skew — melt-ups are real here). ETFs/ETPs import it all into brokerage accounts, and their flows have become the marginal price-setter for Bitcoin itself.

Concepts to master

• Wrapper risk ≠ asset risk — most crypto disasters (Mt. Gox, FTX, GBTC's discount) were custody and wrapper failures, not Bitcoin failing.
• On-chain data — a fundamentals dataset no other asset class has: flows, dormancy, exchange balances, all public. Learn to read it before trusting any narrative.
• Correlation regimes — crypto trades like levered Nasdaq in macro risk-off, and like its own planet during crypto-specific events; position sizing must survive both regimes.
• Fat tails as baseline — sizing, not conviction, is the professional's tool: small allocations capture diversification math while capping worst cases at the sleeve.