Crypto Derivatives Lost Overall Market Share in March Despite Hitting Record High Trading Volume of $6.18T

Crypto derivatives trading became bigger than ever in March, but its share in the total market activity declined for the sixth consecutive month, according to London-based digital assets data provider CCData.

Trading volume in futures and options tied to cryptocurrencies on centralized exchanges rose 86.5% to a record high of $6.18 trillion, translating to three times of the total market capitalization of all cryptocurrencies.

Still, the market dominance of derivatives slipped to 67.8%, the lowest since December 2022 as traders flocked to the spot market, where cryptocurrencies are exchanged for immediate delivery.

Spot trading volume jumped 108% to $2.94 trillion, the highest monthly volume since May 2021. The combined spot and derivatives trading volume increased 92.9% to a record $9.12 trillion.

"The spike in spot trading activity on centralized exchanges coincides with the growing excitement around Bitcoin reaching new all-time highs and the initial signs of returning retail participants in the market," CCData's monthly report said.

Derivatives are often criticized for creating artifical demand and supply via leverage, injecting volatility into the market and are considered a proxy for speculative activity often observed at major market tops. As such, the decline in derivatives' share of the total market activity might be a good news for crypto bulls anticipating a continued price rally.

Bitcoin (BTC), the leading cryptocurrency by market value, rose 16.6% in March, setting new record highs above $73,000, CoinDesk data show. Prices rose over 68% in the first quarter. The CoinDesk 20 Index, a broader market gauge, jumped over 50% in the first three months.