Crypto Futures Markets See Highest Volumes Ever During March Madness

Colin Muller

Crypto-backed derivatives saw their highest trading volumes ever last month, according to the monthly exchange report just out from CryptoCompare. This record-setting month came as global markets, both crypto and traditional, collapsed following the economic impacts – both actual and forecast – of the COVID-19 pandemic.

New high in derivatives volume(source: CryptoCompare)

Total crypto derivatives trading, comprising futures and perpetual swap contracts, totaled $600 billion during March – with $53 billion of that coming on a single day (March 12). This is compared to about $2 trillion of total spot trading for both February and March.

These types of (crypto-)financial products have been growing in volume for the last two years, with the previous peak coming in July of 2019, all in the context of a multi-year retreat from crypto markets’ all time highs achieved in late 2017/early 2018.

Spot versus derivatives(source: CryptoCompare)

The vast majority of this type of trading continues to occur on crypto exchanges, rather than ‘traditional’ exchanges like the CME (Chicago Mercantile Exchange) where only a tiny fraction of trading occurs.

Collapse

An enormous amount of liquidity was wiped off the books during the March crash, and at time of writing derivatives trading is about half as thick as it was a month ago. According to available data, open interest – the value of open derivatives contracts – of the entire Bitcoin futures market is now just over $2 billion worth, whereas it had been well over $4 billion a month ago.

Bitcoin vs. traditionals(source: TradingView.com)

Traditional markets like the S&P500, Dow Jones Index, and gold were likewise all decimated along with crypto during March 2020, which has gone down in the history books as one of the most serious crashes ever. And with the effects of the COVID-19 virus still not fully realized around the world, and its economic effects not to be fully felt until later in 2020, we do not know if the worst is behind us.