Growth of crypto volumes will be in derivatives, Genesis report says

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By BitcoinWiki News

Key Takeaways:

– The future growth of crypto volumes is expected to be in derivatives, particularly in the options market.
– Genesis markets report suggests that the crypto options market has the potential to grow ten-fold from current levels.
– Options are becoming the preferred instrument for institutional players entering the crypto market.
– Institutional investors are showing increased interest in crypto derivatives, with CME crypto options and Deribit experiencing high volumes.
– The CME is seen as a more stable venue for top-tier institutional investors compared to traditional crypto exchanges.
– New products, such as CME’s ETH/BTC ratio futures and Deribit’s volatility futures, are being rolled out for institutional investors.
– Coinbase’s futures volumes are still in their early stages, while Kraken has not been able to achieve critical mass in the futures space.
– Spot market liquidity is suffering due to difficulties with spot exchanges in different jurisdictions.


According to a report by Genesis, a significant portion of future growth in the cryptocurrency market will come from derivatives. The report states that if trends in traditional finance derivatives are followed, the crypto options market has the potential to grow ten-fold from its current levels. These options are also becoming increasingly popular among institutional investors entering the crypto market.

One reason for the growth in crypto derivatives is the increasing interest from institutional investors. The CME crypto options saw a significant increase in volume in July, particularly in ETH volumes. Deribit, another derivative exchange, also saw high monthly volume totals. Institutional investors are attracted to the stability and reliability of venues like the CME, as they perceive these exchanges to have a safer and more regulated environment compared to traditional crypto exchanges.

Institutional investors now have access to various new products that allow them to participate in the crypto market. For example, the CME recently released ETH/BTC ratio futures, and Deribit offers volatility futures. These products provide institutional investors with more options for hedging and trading strategies.

On the other hand, derivative volumes on platforms like Coinbase are still relatively low. Coinbase’s futures volumes are described as nascent, indicating that they are still in the early stages of development. Kraken, another exchange, attempted to enter the futures space but has yet to reach critical mass.

While derivative volumes are growing, the report also highlights the decline in spot market liquidity. The depth of the spot order book is described as chronically flagging. This lack of liquidity is attributed to difficulties with spot exchanges in different jurisdictions, particularly in terms of on and off-ramp processes.

Overall, the report suggests that the future growth of crypto volumes will primarily come from derivatives, with options becoming the go-to instrument for institutional players entering the market. Institutional investors are gravitating towards more regulated venues like the CME, which they perceive as being safer and more reliable. While derivative volumes are increasing, the spot market liquidity is suffering due to challenges with spot exchanges in different jurisdictions.

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