Genesis Report: Crypto Derivatives Emerge as the Next Key Growth Driver in 2023
According to the Q2 2023 report from Genesis Trading, crypto derivatives is set to experience substantial expansion, fueled by a massive decrease in spot market liquidity and a notable trend towards utilizing derivative instruments.
"With spot market liquidity suffering and spot order book depth chronically flagging, it has become increasingly apparent that a significant portion of the future growth of crypto volumes will be in derivatives," Genesis said.
In Q2, despite the BTC price ranging between $27,000 and $30,000, 20 crypto exchanges generated $1.67 trillion in total spot trade volume – a 36% decrease from the previous quarter.
This decline highlights reduced crypto market liquidity, prompting the introduction of various crypto derivatives to address the issue.
The market drop can be attributed to several key factors, primarily the Bitcoin exchange-traded fund (ETF) filing and the significant role played by the Securities and Exchange Commission (SEC) in influencing market dynamics.
The decline began with Bittrex, which faced allegations of trading activities involving unregistered securities. This accusation notably impacted spot trading, showing a substantial decrease in activity on the Bittrex platform.
Subsequently, the focus of the SEC's regulatory scrutiny shifted to other significant players in the market, including Binance US, Binance, and Coinbase.
These exchanges were accused of offering unregistered securities, further exacerbating the decline in spot trading activity. Spot trading volumes hit their lowest point since 2020, according to data from Kaiko.
The consequences of the SEC's actions extended beyond spot trading. The crackdown on these exchanges resulted in a significant loss of liquidity for the top
Read more on cryptonews.com
