Nausheen Thusoo
Crypto spot derivatives saw an all-time high trading volume in March. According to Bloomberg, spot trade volume increased 108% to $2.94 trillion, the largest monthly amount since May 2021, outpacing the gains in derivatives.
Crypto Spot Derivatives See Higher Trading
According to CCData, although Bitcoin set a record in March, the total volume of cryptocurrency spot and derivatives trading on centralized exchanges nearly doubled to its highest level of $9.1 trillion.
According to CCData’s March Exchange review report, spot trade volume increased 108% to $2.94 trillion, the largest monthly amount since May 2021, outpacing the gains in derivatives. The trade volume on Binance, the biggest crypto exchange in the world, surged to levels not seen since May 2021. Derivatives showed an increase of 89.7% to $2.91 trillion, while Spot saw a 121% increase to $1.12 trillion.
Read Also: Gabor Gurbacs Backs USDT to Outshine Ripple New Stablecoin
Non-US Markets See Highest Trading Volume for Centralized Derivatives
EY states that there are two types of derivatives markets for crypto: centralized and decentralized. Non-US markets have the highest trading volume for centralized derivatives, whereas CME dominates the US market with over 60% of monthly derivative trading volume as of September 2023.
Despite being smaller, the decentralized derivatives market is growing in popularity because of its security and transparency. A significant participant in DeFi derivatives is the dYdX protocol.
Crypto Spot Derivatives Market Risk
Market risk, counterparty credit risk, liquidity risk, operational risk, legal risk, and compliance risk are just a few of the significant risk types that are present throughout the trading of cryptocurrency derivatives lifecycle. These risk types make it important to use complex risk models and calculations, such as value at risk (VaR) and funding valuation adjustment (FVA).
All of these hazards highlight how important it is to have strong controls and an all-encompassing risk management strategy when dealing with cryptocurrency derivatives. The underlying crypto assets’ high volatility, continuous trading, enforceability under law, management of crypto collateral, regulatory concerns, and market concentration present special challenges for crypto derivatives risk modeling.
Read Also: Crypto Stocks Spike as Markets Rally
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
