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Crypto Derivative Volumes Saw Speedy Growth as Prices Rose in January
The numbers suggest speculation, not accumulation, was behind sizable gains for bitcoin and ether, according to a report.
Updated Jan 24, 2024, 12:24 a.m. Published Feb 8, 2023, 4:15 p.m.
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Trading activity increased strongly across the board in January, but derivatives volume grew faster than spot markets, according to data from CryptoCompare.
Derivatives volume in January was up 76.1% from December to $2.04 trillion, the largest percentage increase since January 2021 when volume rose 114%.
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Derivatives trading now represents 70.3% of the entire crypto market, up from 68% in December, according to CryptoCompare data.
The large trading activity increase came alongside big gains for the world’s largest cryptocurrencies by market capitalization, with bitcoin (BTC) and ether (ETH) up 40% and 32%, respectively, in January.
“This suggests that price increases were driven by derivative market speculation rather than spot market accumulation,” said CryptoCompare in its report.
With $1.26 trillion in volume, Binance continued as the largest derivatives exchange in January, followed by Bybit which had a 115% increase to $301 billion (the only integrated derivative exchange with triple-digit, month-on-month growth). Bybit recorded its highest-ever market share in derivative markets at 14.6% in January.
Though not keeping up with derivatives, spot markets also witnessed large volume gains in January, with CryptoCompare’s AA- or A-graded exchanges posting a 67% jump in trading activity. Binance, Coinbase and Kraken were the top exchanges in terms of spot volume.
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‘Bitcoin to zero’ searches spike in the U.S., but the bottom signal is mixed
Google Trends data shows the term hit a record high in the U.S. this month, though global interest has fallen since peaking in August.
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- U.S. searches for “bitcoin zero” on Google hit a record high in February as BTC slid toward $60,000 after hitting a peak in October.
- In the rest of the world, searches for the term peaked in August, suggesting fear is concentrated in the U.S. rather than worldwide.
- Similar U.S. search spikes in 2021 and 2022 coincided with local bottoms.
- Because Google Trends measures relative interest on a 0-to-100 scale amid a much larger bitcoin user base today, the latest U.S. spike signals elevated retail anxiety, but does not reliably guarantee a clean contrarian reversal.
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