January 14 was the best trading day of the year for many cryptocurrencies, which saw double or even triple-digit percentage gains. It was also a good day for futures markets, where more than $25 billion in trades was placed on Tuesday. The result constituted the busiest day for futures in almost three months, with the Binance-affiliated FTX seeing much of the action.
Also read: Institutional and Retail Bitcoin Futures Demand Continues to Climb
Bitcoin Shenanigans Get Futures Traders Buzzing
Tuesday, Jan. 14 was all about bitcoin – all the bitcoins, to be precise. BTC, BCH, BSV, BCD, and BTG all posted their best day in months, borne along by Craig Wright’s shenanigans and rumors of bonded couriers delivering private keys. While retail traders scalped what they could from mega-pumps on the spot market, futures traders took a longer view, particularly on platforms like Bakkt, whose monthly futures have been growing steadily. Retail still dominates futures volume, however, as seen in derivatives analysts Skew’s breakdown of Tuesday’s action.
Yesterday’s was most active session this year for bitcoin futures and busiest since 26th of October
$25bln+ going through on our radar pic.twitter.com/LrwGCNQ21M
— skew (@skewdotcom) January 15, 2020
The analytics firm also highlighted a 15% increase in open interest for aggregated BTC futures, which now stands at $3.5 billion. BTC wasn’t the only futures market to see heavy trading either, with ETH volumes up three-fold on Jan. 14.
FTX and Deribit Catch the Glut of the Action
Okex, Huobi, Kraken, Deribit, Coinflex, Bitmex, Bitfinex, FTX, and Binance account for the primary futures exchanges for retail. Of these, FTX and Deribit saw particularly strong demand for futures options on Tuesday, with volumes up around 400% and 500% respectively. On Jan. 11, FTX launched cash-settled bitcoin options, which passed $1 million in volume within hours of going live. 12 hours after launch, more than 2,000 contracts had been traded. FTX may have also benefited on Tuesday by the fact that it offers leveraged trading of BSV, whereas Binance famously delisted the coin last year.
A multi-million dollar “strategic investment” from Binance has enabled CZ’s megalith exchange to lend its expertise to the fledgling FTX, with a view to cornering the retail futures market between them. That achievement is still some way off, with Huobi, Okex, and Bitmex far out in front when it comes to futures volume. Regardless of which retail exchanges hold sway, the proliferation of user-friendly crypto derivatives is a boon to traders seeking an on-ramp to a world of bitcoin options.
Until relatively recently, it was the adversarial world of Bitmex or nothing, complete with the steep learning curve its interface and options entailed. Today, that learning curve has been substantially lowered, with many traders electing to start off on options exchange apps like Moby Trader, to master “micro-trading” with short contract expiration times. The app gives retail traders access to crypto option exchanges like Deribit and Quedex. Having mastered the simplified derivatives options presented to them here, traders can then gravitate to “full fat” derivatives exchanges, with Binance and FTX providing the next step up in terms of accessibility, leaving Bitmex and Deribit to more experienced traders.
Tuesday resulted in around $85M in liquidations on Bitmex, with over 90% of those for traders who’d tried to short BTC. Bears will have better days, and 2020 will have even bigger days for bitcoin futures than yesterday’s impressive $25B haul.
Do you think futures volume will reach record highs in 2020? Let us know in the comments section below.
Disclaimer: Price articles and market updates are intended for informational purposes only and should not be considered as trading advice. Neither Bitcoin.com nor the author is responsible for any losses or gains, as the ultimate decision to conduct a trade is made by the reader. Always remember that only those in possession of the private keys are in control of the “money.”
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