Crypto Derivatives Trading Activity Plunges in December

According to a report from blockchain market data provider CryptoCompare, the trading activity of cryptocurrency derivatives saw a significant decline in December. The report showed that derivatives volumes dropped by 52.7% in December, reaching a total of $1.16 trillion. This decline was seen across the board, with even the largest player in the market, Binance, experiencing a 50% decrease in derivative volume, totaling $726 billion.

Derivative exchanges traded a daily maximum of $64.7 billion on December 16th, a 78% decrease from November's intra-month high of $295 billion. This decline is a significant drop from the usual levels of trading activity seen in the market, and is likely to be a concern for industry participants.

In addition to the decline in derivative trading, the cryptocurrency market saw a decrease in activity on the Chicago Mercantile Exchange (CME). Crypto-related trading volume on the CME fell by 49.2% in December, reaching a total of $14.2 billion. This decrease was driven by a significant drop in both Bitcoin and Ethereum futures trading. Bitcoin futures saw a 48.3% decline, totaling $13.2 billion, while Ethereum futures experienced a 55.3% drop, reaching $481 million.

The decline in trading activity in the cryptocurrency market has been linked to the collapse of FTX, a Bahamian-based crypto derivative exchange, in November. The collapse of the exchange is thought to have caused a loss of trust in centralized exchanges, leading investors to adopt a more cautious stance. This loss of trust is likely to have contributed to the overall 51.4% decline in volumes seen across both derivative and spot markets in December.

The decline in trading activity in the cryptocurrency market is a concerning trend, and it will be interesting to see how the market recovers in the coming months. It is possible that the loss of trust in centralized exchanges will continue to impact the market, leading to further decreases in trading volumes. However, it is also possible that the market will recover as investors become more comfortable with the current state of the industry. Regardless of the direction the market takes, it is clear that the events of November and December have had a significant impact on the cryptocurrency market, and it will be important for industry participants to keep a close eye on developments in the coming months.