Rapid intraday price movements are popular and allow short trading at a lower cost. yes in November 2021 cryptocurrencies reached a maximum of 57.3% in the derivatives markets, they have now exceeded a historical limit reaching 61.2%. This was published by Crypto Compare in a report on exchange platforms last January. In it it was pointed out that derivatives transaction volumes remained stable at $2.86 trillionalthough spot trading volumes dipped to $1.81 trillion.
The report explains that this is due to a increased hedging and speculation in the cryptocurrency market, mainly because participants have changed futures and options trading. Although total transaction volumes continue to be lower than the all-time highs reached last year (they reached $4.96 million) and in the first month of this year there has been a smaller amount of total money moved in the cryptocurrency market, this amount has been used in higher risk speculative instruments. Consequently, although the total investment is lower, this has brought greater benefits.
Exchange platforms such as Coinbase, Binance, Bitstamp or Bitfinex they have an advantage when it comes to escaping the regulation to which traditional markets are subject. This appeals to certain investors as it allows trading with high levels of leverage, which is normally reserved only for professional investors..
If we look at the data from Crypto Compare we can see that up to 1882 Bitcoin option contracts were traded in January alone, an increase of almost 28.6% over the previous month.
Bitcoin futures contract volumes are also taking center stage, growing 23.9% and surpassing 181,400 trades.
The CNMV (National Securities Market Commission) will also face the challenge of trying to study how to prevent risks in operations with contracts for differences, also known as CFDs. Its president, Rodrigo Buenaventura, recently showed great concern about these financial instruments “We want to raise and reflect on the extent to which a greater intervention in CFDs might be necessary. We are observing that the percentage of losses that retail investors suffer is around 80 or 90 percent“.
Although the recent trading of cryptocurrencies with derivatives attracts with its promises of higher levels of liquidity, it seems that the desire of many investors to operate in these volatile markets increases the danger of suffering losses if the correct strategy is not in place.
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