After a relatively stable month in April, volatility returned to the cryptocurrency market in May. Bitcoin prices dropped to $29,925 (down 44.2% from the May opening) and closed at $37,291, 35.4% lower than the previous month – Ether and many other cryptocurrencies followed a trend similar. At the time of this writing, Bitcoin operates with an accumulated drop of 13% in the last 24 hours.
Initial concerns over new cryptocurrency regulations by the People’s Bank of China, combined with Elon Musk’s environmental concerns about Bitcoin mining, and a series of futures contract liquidations on May 19, would have further exacerbated the decline in the most cryptocurrencies. The current drop is still motivated by the same concerns that persist in the month of June.
The participation in open interest of the BTC fell 25.8%, while the ETH rose 9.9%
The price of ETH ended the month 2.5% below the end of April, but gained market share in the derivatives market, as the number of outstanding contracts increased by 9.9% to US$ 6.0 billion (against $5.4 billion in April). According to data compiled from Cryptocompare.
However, in all derivative products, the number of outstanding contracts dropped 14.5%, to US$ 27.8 billion (compared to US$ 32.5 billion in April). Binance had the highest number of open interest in all derivative products, averaging $9.1 billion (down 10.1% since April). Then came Huobi (US$ 4.4 billion, down 13.5%) and OKEx (US$ 3.6 billion, down 20.0%).
Cash and derivatives volumes increased 26.5% and 40.4%
The total volume in cash surpassed US$ 4.8 trillion (up 26.5%) in May. The top 3 Binance exchanges (US$271 billion (down 6.0%)), Huobi Global and OKEx, posted monthly trading volumes of US$1.5 trillion (up 63.0%), and US$242 billion (down 14.6%), respectively.
The total volume of derivatives increased to $5.5 trillion (+40.4%) as investors reacted to heightened volatility. The 3 main exchanges, Binance, OKEx and Bybit, registered monthly trading volumes of US$ 2.5 trillion (up 48.9%), US$ 999 billion (up 50.8%) and US$ 574 billion ( high of 24.0%), respectively. The derivatives market now represents 53.3% of the total cryptoactive market (vs. 50.2% in April).
This scenario explains the extreme volatility of the market over the past two months, with many contracts being closed at the same time and many traders having their positions liquidated.
CME became ETH’s largest futures exchange
In May, CME became the largest ETH futures exchange, with open interest reaching $489 million, an increase of 66.2% since April. On the other hand, alternative derivatives exchanges recorded an aggregate reduction in ETH’s open futures positions of 0.7%. Highlights Grayscale that has presented increasingly lower volumes.
Likewise, CME remains the largest BTC futures exchange, with 29.8% of the interest outstanding on the exchange. This follows the launch of the Micro Bitcoin Futures exchange earlier this month, with the aim of attracting smaller traders. As the CME is the world’s largest derivatives exchange, this paves the way for the continued institutionalization of cryptocurrencies.
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