Derivative boom: a threat or new market opportunity

    Bitcoin futures

    Derivatives based on cryptocurrencies have been on the market for three years, but for a long time on bitcoin- futures did not pay much attention due to the small volume of trading in contracts and the small sites offering such services.

    But in 2020, the situation is changing rapidly - the derivatives market is growing, increasing the impact on the underlying asset. What is the dynamics of the cryptocurrency contract market and how does it threaten coins?

     Cryptocurrency derivatives: historical high In the first quarter of 2020 , the trading of cryptocurrency derivatives was 314% higher compared to the same period last year:

    Динамика объема сделок с криптовалютными деривативами
    Dynamics of the volume of transactions with cryptocurrency derivatives

    At the same time, there is also an increase in the share of derivatives in the total trading volume - I agree report in the first quarter it amounted to 39.08%. Bitcoin remains the dominant in the futures market, with a total share of contracts of 78%:

    Структура рынка деривативов по базовым активам
    Derivatives market structure for underlying assets


    However, this is general quarterly data. A more detailed analysis of the period allows you to see an ambiguous picture with peaks of activity and falling interest of traders:

    Суточные объемы торгов биткоин-фьючерсами за февраль-апрель
    Daily trading volumes of bitcoin futures for February-April

    So, Binance on April 30, 2020 reported record volumes on futures - $ 10 billion:

    Объемы торгов биткоин-фьючерсами на Binance
    Trading volumes of bitcoin futures on Binance

    The same peak is confirmed by the skew data on open interest (the number of open contracts) bitcoin futures Ovs on the CME:

    Динамика открытого интереса к биткоин-фьючерсам на СМЕ за январь-март
    Dynamics of open interest in Bitcoin futures on the CME for January-March

    As well as data from Arcane Research:

    Динамика открытого интереса к биткоин-фьючерсам на СМЕ с мая 2019-го по апрель 2020-го
    Dynamics of open interest in Bitcoin futures on CME from May 2019 to April 2020

    The latest chart shows the trend an increase in the volume of open CME futures, which may be associated with bitcoin halving . Also, by the end of April, on Bitfinex , long-term positions in ETH futures increased, which is associated with the upcoming network upgrade to version 2.0:

    Рост долгосрочных ETH-фьючерсов на BitMEX
    Long-term growth ETH-futures on BitMEX

    However, while BitMEX (3rd place in the TokenInsight ranking in derivatives trading volume) in April lost 40% of active users:

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