Bitcoin Speculators Gain Upper Hand as Derivative Trading Surges

As reported on Bloomberg, “As Bitcoin becomes boring for many in the get-rich-quick crowd with volatility ebbing, trading in derivatives of the largest cryptocurrency is exploding.

“At $5 billion to $10 billion a day, the amount of derivatives traded globally exceeds Bitcoin spot volume by 10 to 18 times, according to estimates from data trackers Skew and BitcoinTradeVolume.com. The volumes were about equal at the start of the year, through definitive figures for both are hard to come by from exchanges.

“Leading the charge are exchanges mostly run in Asia such as BitMex and Binance that offer futures contracts for Bitcoin and smaller coins that can be leveraged more than 100 times and often perpetually. That’s especially attractive to traders still stung by Bitcoin’s almost 60% decline since late 2017 and hampered by the often thin liquidity that is a consequence of the buy-and-hold Bitcoin ‘whales’ who controled more than a third of the decade-old digital asset.

“’That’s where the money is to be made in crypto,’ said Sid Shekhar, co-founder of London-based tracker TokenAnalyst. ‘It’s the biggest casino ever.’

“And the number of players is rising as more exchanges seek to get customers to trade more. On Oct. 18, Boston-based Circle Internet Financial Ltd. spun off the Poloniex exchange it bought 18 months earlier as an Asia-based independent company partly so it would be free to offer derivatives.

“’To offer this in the U.S. is very cumbersome, it’s very, very heavily regulated, it’s also limited to Bitcoin,’ Circle Chief Executive Officer Jeremy Allaire said. ‘The most popular products that people trade, you can’t even offer them in the U.S…’”

Continue to read the full story on Bloomberg.

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