Share this article
Here's Another, Surprising Reason Why Crypto Prices Fell – Derivatives
The traditional markets' recent sell-off drove cryptocurrency prices down, but the way it did so was more complicated than even many of the most sophisticated players in crypto were able to grasp.
Updated Sep 14, 2021, 8:18 a.m. Published Mar 10, 2020, 8:55 p.m.
The traditional markets' recent sell-off drove cryptocurrency prices down, but the way it did so was more complicated than even many of the most sophisticated players in crypto were able to grasp. That’s because crypto’s drop was staged in the derivatives markets.
STORY CONTINUES BELOW
Don't miss another story.Subscribe to the Crypto Daybook Americas Newsletter today. See all newsletters
Financial instruments like futures and options make up derivatives markets, where value derives from, and is dependent on, the value of an underlying asset, in this case cryptocurrency. Coupled with a massive sell-off in the cryptocurrency markets, derivatives also contributed to recent declines in price.
In just 48 hours from March 7 to March 9, bitcoin fell 17 percent from $9,215 to a fresh two-month low of $7,628.
As the S&P 500 tumbled 7 percent Monday, traders took to selling, not buying, crypto to deal with their own cash shortfalls.
“The crypto industry is reacting to the traditional market dump,” said Mostafa Al-Mashita of Secure Digital Markets, a Canadian crypto brokerage firm.
The effects of traditional markets on crypto befuddled many cryptocurrency stakeholders. Brian Armstrong, CEO of Coinbase, one of the most regulated and bank-friendly exchanges on earth, appeared to be taken aback at the way market dynamics within cryptocurrencies panned out.
What Armstrong and other long-view cryptocurrency holders perhaps don’t realize is the impact derivatives trading has on “thin” or low-liquidity markets like cryptocurrencies.
Selling pressure in cryptocurrencies can create a cascading effect that is hard to recover from. Traders on derivatives exchanges like BitMEX and Deribit must contend with auto-liquidation.
Such a margin call-like event happens after there is intense spot market selling of cryptocurrencies for much-needed U.S. dollars on exchanges like Coinbase.
“As people lose discretionary income and short-term liabilities get called in, all risky assets are correlated on the downswing for the short term and that includes both traditional markets as well as crypto,” said Kevin Zhou, CEO of algorithmic trading firm Galois Capital.
More For You
What to know:
- As of October 2025, GoPlus has generated $4.7M in total revenue across its product lines. The GoPlus App is the primary revenue driver, contributing $2.5M (approx. 53%), followed by the SafeToken Protocol at $1.7M.
- GoPlus Intelligence's Token Security API averaged 717 million monthly calls year-to-date in 2025 , with a peak of nearly 1 billion calls in February 2025. Total blockchain-level requests, including transaction simulations, averaged an additional 350 million per month.
- Since its January 2025 launch , the $GPS token has registered over $5B in total spot volume and $10B in derivatives volume in 2025. Monthly spot volume peaked in March 2025 at over $1.1B , while derivatives volume peaked the same month at over $4B.
More For You
Why bitcoin ETFs look like they’re falling short, even as their role grows: Asia Morning Briefing
What looks like underperformance reflects a structural shift: ETF flows now smooth volatility rather than amplify crypto rallies.
What to know:
- Bitcoin ETFs are unlikely to surpass last year's inflow record, with traders assigning only a 2% chance of beating it in 2025.
- Despite a gap in ETF inflows, they continue to play a stabilizing role in the market, absorbing risk rather than amplifying price swings.
- Bitcoin has been consolidating around $87,000 to $88,000, performing better than the broader crypto market, while Ether has underperformed.
Top Stories
