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Crypto derivatives market share sets new highs

10 Oct, 2023
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The crypto market's volume continues to decline, reaching levels it last saw in 2019. In September, the spot trading volume amounted to only $336 billion, while derivatives volume was at $1.3 trillion.

Image source: ccdata.io

Interest in trading derivatives is declining more slowly, bringing its share to a record 79.9%.

Image source: ccdata.io

The growth of the speculative component is a negative factor, as it reduces the market's ability to withstand stress. In the event of sudden news, the market reaction is more acute due to the liquidation of the traders' or buyers' positions on trading platforms. This increases large players' interest in manipulating prices.

Image source: StormGain cryptocurrency exchange

The decline in spot trading volume is also caused by the accumulation of Bitcoin and investors' unwillingness to sell it at current prices. The reserves of long-term holders (those whose coins have been idle for six months or more) have reached 14.7 million BTC.

Image source: glassnode.com

Mass coin purchases are curbed by the inconsistencies in crypto regulations, the Fed's monetary policy tightening and the high US Treasury bond yields. Institutional investors' behaviour is the best representation of the latter reason. Without waiting on the desired quick approval for crypto spot ETFs, they have withdrawn $103 million from Bitcoin funds over the past month.

Image source: coinshares.com

A high degree of uncertainty may persist until the end of the year. The Fed is threatening another key interest rate hike, and the SEC is nowhere near approving spot ETF applications. Over the past six months, the 99Bitcoins online obituary hasn't recorded a single article about the upcoming demise of Bitcoin, and even more forecasts of its medium-term growth are being published.


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