Genesis Q2 2023 Report: Crypto Derivatives Making Waves As The Next Frontier

The cryptocurrency landscape is undergoing a shift as the spotlight increasingly turns toward crypto derivatives, marking a juncture for the industry’s growth. Genesis Trading, a leading over-the-counter (OTC) trading service, has unveiled a compelling narrative in its Q2 2023 report, outlining the importance of crypto derivatives in navigating the evolving market dynamics.

In a scenario where spot market liquidity faces challenges and order book depth struggles, Genesis Trading shows the significance of derivatives volumes as the industry’s next catalyst for expansion. This came from a carefully crafted report that delves into the nuances of the derivatives market and its potential to reshape the crypto landscape.

Check out our latest Market Observations Report to explore the trends that marked Q2 2023, including:
→ Derivatization
→ Institutionalization
→ Commoditization vs. Specialization
→ And Macrofication
Get the full report here: https://t.co/MdYnILZglf

— Genesis (@GenesisTrading) August 9, 2023

Genesis Trading’s Q2 report shows the surging relevance of the derivatives market, offering a lifeline amid the challenges experienced by the crypto market. The report points out that the future growth of crypto volumes is increasingly reliant on derivatives trading.

The report also brings attention to Deribit’s remarkable achievement: setting a new record for the number of derivatives contracts traded within 24 hours. This milestone synchronizes with Bitcoin’s upturn past the $30,000 threshold, spotlighting the relationship between derivatives activity and market movements.

While Genesis Trading also shines a light on Coinbase’s strategic move with the introduction of institutional-sized fixed-date and perpetual futures in June, this strategic expansion into derivatives shows the growing prominence of these instruments among institutional players.

The report unveils a substantial uptick in options volumes at the Chicago Mercantile Exchange (CME), with a noteworthy increase of nearly 25% in July, reaching approximately $1 billion. This surge in options volumes runs parallel to a decline in futures trading volumes, signaling a shift in institutional preference toward options trading.

Pioneering Growth and Transformative Potential of Crypto Derivatives

Genesis Trading’s report not only offers insights into current market trends but also delves into the transformative potential of a robust crypto derivatives market.

1. Untapped Potential of Crypto Options: Despite the rapid growth of the options market, its volume in Q1 2023 represents only around 10% of the underlying spot volume. Drawing parallels with traditional finance, where equity options outpaced the notional traded value of underlying equities, Genesis Trading envisions the crypto options market expanding tenfold from its current levels.

2. Institutional Participation on the Horizon: The Q2 report highlights the vast potential for increased institutional involvement in the crypto space, with approximately $50 trillion in capital held across U.S. pension funds, 401(k) plans, and hedge funds. The prospect of these funds gaining exposure to Bitcoin through spot-based exchange-traded funds (ETFs) could fuel the crypto market’s growth.

The Road Ahead

As the crypto derivatives landscape continues to expand, the industry is witnessing an increase in established financial entities entering the cryptocurrency market. This trend signifies a broader shift towards adoption and legitimacy. Moreover, the recent price surge in Bitcoin has further propelled derivatives trading, offering a way for traders to capitalize on market volatility while efficiently managing risk.

The market dynamics require innovative solutions to navigate uncertainties, and the Genesis Trading Report gave a new insight into the market. With derivatives emerging as a transformative factor, both investors and market participants are eager to embark on a journey into the dynamic world of crypto derivatives.

NB: Any Information provided here is NOT FINANCIAL ADVICE. Do Your Own Research before making any Financial Decisions.