Coinbase’s David Duong Dives Deep into the $BTC and $ETH Futures Market

• David Duong delves deep into the trends and disparities in the crypto futures market.
• Coinbase’s international exchange shows a drop in perpetual futures trading volumes.
• Discrepancies observed between Coinbase and non-US exchanges in volume and open interest.

David Duong, CFA at Coinbase, provides an in-depth analysis on crypto futures, shedding light on trading patterns and volume shifts across global exchanges.

Coinbase Witnesses Noteworthy Perp Trading Dynamics

Recently, Duong highlighted the normalization of trading volumes in perpetual futures on Coinbase’s international exchange. An average daily volume of approximately $120M was reported over the past five days, marking a decline from the $165M observed the prior week. Notably, a significant spike occurred on August 17 and 18 with volumes reaching $260M and $287M respectively, driven predominantly by liquidations. The average trading volume for August stands at $127M, up 64% from the past two months.

A Stark Contrast with Non-US Exchanges

Contrarily, non-US exchanges experienced a drop in daily trading volumes of BTC and ETH perpetual futures by over 31% between June and August. Duong accredits this disparity to Coinbase’s international exchange launching in May and the recent reduced market volatility. Open Interest (OI) for these futures also saw a significant decline, moving from a notional $17.8B before the recent liquidation cascade to just below $12.2B as of August 24.

Open Interest and Liquidation Dynamics

Duong points to the limited possibility of large liquidations in the near future. This assertion is based on the return of OI weighted funding rates to positive realms for both Bitcoin and Ether, which averaged +0.20% and +0.33% over the last three days.

Institutions Show Increased Interest in Traditional Futures

On the institutional front, CME ETH contracts experienced an uptick, reflecting a 10.8% OI increase between August 17 and 23, achieving a notional value of $348M. Conversely, non-US exchanges (barring Coinbase) saw a 2.5% decline, amounting to $482M, though this surpasses the Year-to-Date average of $452M.

Conclusion

Duong’s research provides a comprehensive glimpse into the evolving landscape of crypto futures. With clear shifts in volumes and open interest, and the growing role of institutions, the dynamics of the futures market are evidently in flux. As the crypto world continues its rapid evolution, such insights prove invaluable for traders, investors, and market enthusiasts alike.