Bitcoin futures activity fell off cliff in December

Quick Take

  • Bitcoin futures volumes plunged in December.
  • Analysts suggest the FTX collapse damaged confidence in centralized exchanges. 

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. 


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