- The derivatives sector continues to demonstrate significant strength in 2020, with trading volume in Q2 totalling $2.16 trillion.
- One of the newcomers on the market of crypto exchanges is Bingbon which achieved a derivatives trading volume of $30.5B in Q2.
Competition in the crypto derivatives market is set to become even “more intense” according to the authors of a recent report by TokenInsight, the global cryptocurrency data and rating agency. The increased competition will be fueled by “key emerging exchanges” including Bingbon, ZBG, Phemex and HBTC, who are bringing a range of new services to market in a bid to unsettle the established players.
The derivatives sector continues to demonstrate significant strength in 2020, with trading volume in Q2 totalling $2.16 trillion, representing year-on-year growth of 165%. Despite this rapid expansion of the market, the TokenInsight report found Q2 performance to be “not as good as in the first quarter,” with low volatility and the exhaustion of Bitcoin’s halving buzz as temporarily subduing trader enthusiasm.
Emerging Exchanges Gain Ground
The long-term outlook for derivatives continues to look bright as the big five exchanges all showed trading volumes in excess of $100B. Huobi were market leaders with trading volume of $433.4B in Q2, with Binance closing the gap at $336.1B, OKEx at $243.2B, BitMex with $203.4B, and Bybit rounding out the list at $105B. In this market of goliaths, a handful of emerging exchanges are testing new services to gain a toehold in the space.
Among those emerging players is Bingbon, which has made rapid progress utilizing Circle’s USDC stablecoin in the Southeast Asian market. The exchange recorded derivatives trading volume of $30.5B in Q2. Part of the rising appeal of the exchange is down to Bingbon’s Copy Trading functionality, which allows its more than 100,000 users to easily emulate the trading behaviors of its most successful users.
On the Copy Trade page users can browse the success metrics of the best online traders including their profitability percentage and win rate, as well as their predominant trading style. As novice traders look for ways to break into derivatives without the ubiquitous pain period, social trading features will prove increasingly popular.
ZBG is another emerging exchange that has made significant headway, again by offering a helping hand to novice traders, in this case in the form of user education. With 2.5 million site visits a month recording an average session length of 15 minutes, ZBG’s upskilling strategy appears to be paying off. In Q2, the exchange recorded derivative trading volumes of $30.7B.
A third exchange, HBTC, is pinning its future success on reform of the platform trading model, paying money back to its users, while Phemex is promoting membership-based spot trading, in which member accounts are exempted from trading fees. In all cases, newer exchanges are making headway by offering key differentiators to existing competitors.
What About Defi?
While CEXs have lost ground to DEXs, which now capture around 5% of all spot volume, in the world of derivatives that trend seems a long way from replicating itself. In Q2, trading of PBTC-USDC on dYdX hit approximately $22M, accounting for a modest 0.1% of all derivatives market volume. Several defi projects including Synthetix and dHedge are making headway on decentralized derivatives trading, but for now, centralized platforms hold sway.
As Coin Metrics noted in its August 3 market report, “Derivatives are incredibly influential on the broader market due to their association with levered trading, and bitcoin’s recent price appreciation has led to a surge in perpetual swap volumes.”