The world of cryptocurrency derivatives trading has seen some interesting developments over the past few months. In April, the volume of derivatives trading on centralized exchanges declined, but spot trading volume declined even more. As a result, the market share of crypto derivatives trading rose to a record 77.6%, marking a new all-time high.
Although absolute derivatives trading volume fell by 23.3% to $2.15 trillion, the derivatives market share surged due to a 40.2% decline in spot volume to $621 billion. This spike in the derivatives market share – which has been rising for three consecutive months – highlights the speculative nature of the crypto market, especially amid uncertainties around the possibility of a pause on rate hikes by the Federal Reserve.
Binance, the largest derivatives trading platform, accounted for 61.4% of the market, while OKX and ByBit followed in second and third place, with 15% and 14.6% market shares, respectively. However, the landscape of the crypto derivatives market is changing rapidly, with Coinbase launching a derivatives platform in May, and Gemini announcing plans to do the same. These moves seem likely to further increase the market share of crypto derivatives markets.
It is clear that cryptocurrency derivatives trading is becoming an increasingly important part of the overall crypto market. The rise in market share can be attributed to the growing number of traders who are turning to derivatives as a way to manage risk and gain exposure to the crypto market. However, as with any speculative market, there are risks involved, and traders must exercise caution when entering into derivatives contracts.
Despite the potential risks, the rise of the crypto derivatives market is a sign of the growing maturity of the cryptocurrency industry. With more institutional players entering the market and more exchanges offering derivatives products, it is clear that cryptocurrency is here to stay. As the industry continues to evolve and mature, it will be interesting to see how the derivatives market evolves alongside it.