Both Bitcoin and Ethereum had reestablished themselves over spot volume, according to a study of their futures traffic, Cryptoslate reported.
Trading participants can purchase and sell tokens on spot markets for prompt delivery. Spot volume is the total number of coins that have been successfully transferred on-chain. Futures traders, on the other hand, purchase and sell derivatives contracts that reflect the value of a particular cryptocurrency. Futures trading is preferred by seasoned traders because profits can be made in either direction of the market, as reported by Cryptoslate.
Futures markets often transact more volume than spot markets do under “normal” conditions because professional traders use leverage and are typically more financed than retail spot traders.
The graph that follows demonstrates the general trend of Ethereum spot volume trailing the futures market However, the end of 2021 and the start of the new year saw a very high concentration of spot markets.
The difference between futures and spot becomes more pronounced starting in late June 2022. This, according to analysts, is a result of growing rumours about the Merge, in which Ethereum’s current execution layer will merge with its Proof-of-Stake (PoS) consensus layer.
A different picture emerges from an analysis of the spot and futures markets for bitcoin. The graph below demonstrates that moving into the 2021 bull run, futures volume had a sizable lead. Spot volume took control as the price of bitcoin peaked in Q4 2021, flipping this scenario. Futures traders have reasserted their position since June 2022, which has caused a spike in futures volume relative to spot volume.
The volume of BTC and ETH futures has increased recently, which shows that derivatives traders have resumed gambling on risky assets. This would suggest that traders in derivatives believe the market has recovered from the leverage damage caused by the Terra crash.
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