Bitcoin futures trading plummeted as 2022 came to a close.
Bitcoin futures volumes were just $386.6 billion in December, according to The Block's data. Volumes were down 39% month-on-month as they clocked the worst month since October 2020, when volumes were $333.6 billion.
Regulated bitcoin futures on the CME also approached October 2020 lows. Volumes on the exchange were just $19.5 billion for the month. CME's open interest of bitcoin futures dropped 11.1% to $1.36 billion by the end of December, according to The Block Research.
Average daily trading volumes of CME bitcoin futures plunged 53.1% to $632 million.
Carlos Gonzalez, a research analyst at 21.co, noted the drop in volumes wasn't limited to the derivatives market, as spot volumes on centralized exchanges also experienced a significant decrease. Exchange volumes dropped about 47.5% in December to $353.5 billion from $673 billion in November, according to Gonzalez.
"The fact that both spot and derivatives volume was down significantly in December indicates less risk appetite for speculation in the market. A possible explanation of this behavior is that FTX's collapse in November has led to a lack of confidence in centralized exchanges, leading to less trading activity," he said.
Although he didn't express a strong opinion, Gonzalez said futures volumes could pick up if investors regain confidence in centralized exchanges. He added that confidence in exchanges would require proof-of-reserve attestations and no further collapses. "It will also depend on macroeconomic and general market sentiment," he concluded.
© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.