Derivatives exchange Bybit launches wealth management

Quick Take

  • Bybit is expanding into wealth management as derivatives volumes decline across exchanges. 
  • While the Dubai-based exchange has seen market share increase relative to its rivals, its volumes have dropped precipitously since March. 

Crypto derivatives platform Bybit is expanding into the wealth management business.

The firm, which launched in 2018, announced Tuesday the launch of Bybit Wealth Management. The firm described the new offering as a "comprehensive service that enables all Bybit users to manage, plan and invest crypto with no fees."

To start, the firm is offering so-called fund pools which will provide users with a 4.5% APR on deposited USDT. In an FAQ describing the new business line, Bybit said that all funds are kept within its platform, whilst being managed by "trusted third parties."

"Assets allocated to the Fund Pool product are distributed and managed by trusted third parties that have undergone a rigorous selection process," the firm said. "All strategies executed by these third parties undergo robust and comprehensive risk management monitoring. This product exclusively employs risk-neutral strategies."

The firm also plans to release structured products as part of the offering. 

Bybit's bitcoin futures market has seen open interest steadily increase over the course of the year, hitting an all-time high of $2.64 billion on August 1, according to The Block's data dashboard. As of August 7, it's market share—in terms of open interest—among bitcoin futures marketplaces stands at around 22.6%. 

Trading volumes declining

The expansion into new businesses outside of trading stands to reason considering the competitive dynamics shaping crypto's exchanges. On the whole, trading volumes have dropped precipitously, and active day-traders spend more time away from their keyboard. 

In Coinbase's quarterly earnings, CEO Brian Armstrong said that less sophisticated users leveraging its buy-and-hold tools tend to be more engaged with the platform during bear market cycles than advanced, active traders.  

Recent regulatory headlines out of trading behemoth Binance also present an opportunity for Bybit and other smaller, off-shore shops. Bybit as well as Huobi and OKX have seen their spot trading volumes increase relative to Binance last month, Bloomberg reported.

Still, Bybit's bitcoin futures volumes have been treading lower since March, declining from around $200 billion during the month to about $85 billion during July. 

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