A look at the performance of institutional bitcoin derivatives

The digital asset derivatives market exploded over the past year. September 2020 average bitcoin futures dollar volumes were ~$300 billion when aggregated across all major exchanges. Since then, the average monthly dollar volumes increased roughly 5.0x with ~$1.6 trillion of futures volume in September 2021. There remains a high correlation between derivatives growth and bitcoin’s rising spot volume. 

While off-shore exchanges continue to dominate the majority of trading, futures markets on traditional US-based exchanges remain a reliable metric for gauging “institutional” interest in the digital assets market. Usually, large players prefer to trade via established exchanges that have the infrastructure, regulatory benchmarks and trade execution familiar to these institutional traders. Furthermore, the trading capital requirements on established exchanges make their use prohibitive for smaller retail traders. For example, until recently, CME only offered bitcoin futures sold in quantities of five bitcoins. The high capital requirement barred many investors from entering the space.