The cryptocurrency spot market witnessed a growth of 104% growth in the first quarter. The cryptocurrency futures market saw an increase of 314% during that period.

In the first quarter (Q1) of 2020, the trading volume in the cryptocurrency spot and futures markets was about USD 8.8 trillion, according to two industry reports. This amount represents a huge 314% increase for futures trade and a 104% increase for spot trade. Besides, the correlation between the trading volume in spot markets and Bitcoin’s price in the quarter was too low.

Two recent reports by TokenInsight revealed the status of the cryptocurrency spot and derivatives markets in the first quarter of the year. In its “2020 Q1 Cryptocurrency Spot Exchange Industry Research Report,” the company studied more than 300 cryptocurrency spot exchanges.

However, due to unreliable information from some small exchanges and the challenges of determining the authenticity of the data, the analysis only included 295 exchanges, of which 41 were new and 16 decentralized. The report states that the total trading volume for the entire market in this quarter was USD 6.6 trillion, representing a quarterly increase of 104%.

The actual volume shown in the report was USD 6,647 trillion. Despite a volume of false exchanges, the industry is still developing significantly, according to the report. The analysis noted that the correlation between the trading volume in the market and Bitcoin’s price was extremely low in the first quarter of 2020.

Besides, the study found that Bitcoin’s dominance had increased compared to that of last year. The report states that the investors in the bearish market did not have enough confidence in non-major cryptocurrencies, reaffirming that Bitcoin will maintain its dominant position in the first half of the year.

USD 2 Trillion in Crypto Derivatives

Another report by Tokeinsight, titled “2020 Q1 Cryptocurrency Derivatives Exchange industry Report” details the state of the cryptocurrency derivatives market. The analysis includes 12 derivatives exchanges: BitMEX, Okex, Huobi DM, Binance Futures, Deribit, Bitget, Binance JEX, FTX, Gate.io, BFX.nu, Bitz, and Kumex.

In the first quarter of 2020, the total volume of futures trade in the industry reached USD 2.1048 trillion, which represents an increase of 314%, compared to the average of the four quarters of 2019.

Except for a small decrease in the fourth quarter of 2019, the trading volume of cryptocurrency futures grew steadily in 2019. The total market turnover in the first quarter of 2020 is approximately 8 times greater than that of the first quarter of 2019, according to the report.

Three major cryptocurrency futures contracts (BTC, ETH, and EOS) accumulated over 90% of the total crypto derivatives market turnover in the first quarter of 2020. BTC alone accumulated 78%.

The analysis also found that the correlation coefficient between cryptocurrency futures trading volume and spot trading volume declined from 0.76 to 0.34 in the previous quarter. This suggests that the futures market participants may have been relatively independent from the spot market, as the report concluded.

Whilst research on the derivatives trading industry for 2019 shows that last year’s cryptocurrency futures market selling volume was around 20% in cash, the percentage for this year is expected to increase substantially. It is worth noting that the total selling volume of cryptocurrency futures has reached more than 33% in cash in the first quarter alone.

The report states that the futures trading volume for the year 2020 is expected to be more than twice that of the spot market. Compared to the idea that cash is king in current market conditions, the cryptocurrency futures industry is still developing rapidly.

By Willmen Blanco

LEAVE A REPLY

Please enter your comment!
Please enter your name here