Capital influx rise depicts surging interest in the derivatives market as unsettled futures contracts reach an all-time high. Total open interest across major exchanges is within the grasp of the $20 billion mark.
Cryptocurrencies continue to amass interest of late. In fact, every aspect of the digital asset space has recorded significant growth. This is due to the high influx of retail and institutional traders. The Bitcoin derivatives market has also benefitted immensely from this.
On-chain data aggregator, Glassnode reports that significant capital has flowed into the bitcoin derivative market recently. This strongly shows that more traders are looking to capitalize on the flourishing market.
Bitcoin Futures Surge
The number of unsettled bitcoin futures contracts is also at an all-time high, showing a surge in interest.
Futures contracts allow traders to agree to either buy or sell crypto at a particular price later. Bitcoin futures was the first to launch before other cryptocurrencies became available in the derivative market.
Glassnode shows that open interest in the derivative market across major exchanges is just shy of the $20 billion marks. Trading volume has continued to hit the roof.
Regulations Outlook on Derivatives
Despite the massive growth, cryptocurrency derivatives have remained under the radar of regulatory bodies. Britain’s Financial Conduct Authority (FCA) recently imposed a ban on the sale of derivatives. The sale of Exchange Traded Notes (ETNs) to retail traders was also declared prohibited. The country’s financial watchdog started considering the ban in October 2019. It said that UK citizens had lost over $492 million in the derivatives market between mid-2017 to 2018.
FCA finally enacted the ban early this year. The regulatory body cited several reasons for the ban. It said that derivatives are “ill-suited for retail consumers because of the harm they pose.” The body also stated that retail consumers could not reliably value them.
Derivative exchanges are already ceasing operations in the country in compliance with the ban. Bybit requested that all UK traders close their positions and withdraw balances before March 31st, when it will officially halt operations.