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Bitcoin Derivatives Market Shows Its Maturity, Estimates Glassnode
Investors get low returns on bitcoin due to its low price volatility
The bitcoin (BTC) derivatives market has shrunk since the cryptocurrency hit its all-time high of $67,800 five months ago. However, the behavior of traders shows signs of maturation and growth over time.
Glassnode report released today indicates what the derivatives market bitcoin has grown and matured “by leaps and bounds” in the last five years. “It has gone from a small fraction of spot trading volume in 2017 to now representing the dominant place for price discovery,” she determined.
In this overview, he mentions that perpetual futures are increasingly becoming the preferred instrument for trading. However, their volume has been declining since the beginning of 2021, despite the fact that even with the setback they continue to double those of 2020.
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During the first half of 2021, trading volumes at $70-80 billion per day were typical in futures, while they are now down over 59%. They currently hover around USD 30.7 billion daily. It wasn’t even very high during its all-time high, which means that the traders prefer to invest directly in cryptocurrency instead of derivatives.
Bitcoin price currently has minimal volatility
Glassnode believes that the compression of the derivatives market of the main cryptocurrency during 2022 is due to the low price volatility that bitcoin has had. This has caused traders to have very low returns, less than 3%, at a time when inflation exceeds that figure. Something that he believes has motivated some capital to leave the Bitcoin space in search of higher yields or greater financial protection.
In communication with CriptoNoticias, the trader Eduardo Gavotti estimates that this is due to the current intention of investors to seek lower risk assets. A situation motivated by the economic crises caused by China’s health measures in the face of the resurgence of covid-19 and Russia’s war against Ukraine in an environment of record global inflation.
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So far in 2022, bitcoin and its derivatives remain correlated with the United States stock market, specifically the stocks of technology companies. A sign that demonstrates the maturity it has gained in recent years, as well as its recognition in traditional finance.