TokenInsight: trading volumes of derivatives in Q3 increased 1.7 times year-on-year

11.11.2020
«first-p»> In Q3 2020, trading volumes of crypt-currency derivatives increased by 159% as compared to the same period of the previous year;

It may seem to many that the market for crypt-currency derivatives has slightly «emptied» due to the mass enthusiasm of the Decentralized Finance (DeFi) industry. However, according to TokenInsight experts, the volume of trading in derivatives continued to grow in the third quarter of 2020.

Having analyzed the data obtained from 42 trading platforms, TokenInsight specialists concluded that the total volume of transactions on the market of crypt-currency derivatives amounted to $2.7 trillion, which is 25.1% more than in the previous quarter, and 159. It was 4% more than in the third quarter of last year;

Crypt currency derivatives

Since the beginning of the year, the volume of trading in cryptoderivatives has continued to increase, 4.35 times exceeding the spot market indicators. In Q3 the derivatives market fluctuated greatly, taking into account «depressed» moods of market participants in June and July. Average daily trading volume on this market amounted to $29.35 bln. On July 28, daily trading volume reached its peak of $70.8 bln, which is $10.5 bln higher than the record figure of the previous quarter ($60.3 bln). The lowest daily trading volume was $9.3bn on July 19, while the lowest value in the previous quarter was $11.7bn

In Q3 2020, the standard deviation of the daily volume of derivatives trading on the whole market amounted to 13. For comparison, the similar figures for Q2 and Q1 amounted to 7.92 and 9.86, respectively. This indicates a significant increase in the volatility of daily trading volume. At the end of July trading in derivative financial instruments started to recover. As for the open interest in the market of crypt-currency derivatives, there is also an upward trend.

In the third quarter of 2020, the open interest increased by 30% — from $5.55 bln to $7.22 bln. According to TokenInsight specialists, investors preferred to preserve assets for a longer period of time and take a waiting position. Investors’ willingness to trade has increased this quarter, but they are still hesitant because of market fluctuations, which leads to parity between long and short positions;

According to TokenInsight, the three leaders in terms of trading volume of crypt-currency derivatives were futures divisions of Huobi, Binance and OKEx exchanges. However, due to competition, the total trading volume of derivatives on these three trading floors was 48%, and in spot trading — 16%. In Q3, the volume of spot transactions on the Kraken exchange amounted to $22.16 bln, which is 3.6 times more than its volume of transactions with derivatives. In addition, the volume of transactions with crypt currency derivatives on Bakkt platform increased by 352%, and on the Chicago Mercantile Exchange (CME) — by 80.6%. TokenInsight researchers noted that such data indicate growing demand for regulated cryptoderivatives;

Exchange for trading crypt-currency derivatives

TokenInsight analysts have also identified five exchanges leading in terms of the volume of open-ended contracts in the third quarter of 2020. Thus, the volume of open-ended contracts on crypt currencies on Huobi Futures has increased from $125 billion to almost $254 billion, while the share of open-ended contracts has increased by 13.7%. The same figure for Binance Futures was $463.1 billion. However, under the influence of the DeFi industry, the dominance of contracts for bitcoin has weakened. In Q3, BTC contracts accounted for 65% of total derivatives contracts, while in the previous quarter they accounted for 82%. At the same time, the trading volume of contracts for DeFi’s ether and assets increased significantly;

Perpetual contracts on exchanges for trading in crypt-currency derivatives

Earlier Heath Tarbert, chairman of the Commodity Futures Trading Commission (CFTC) stated that regulated derivatives will increase market confidence in crypt currencies. At the same time, the Financial Services Authority (FSA) intends to prohibitcrypt currency derivatives for retail investors to protect them from losses and market manipulation;