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Huobi’s decline in market share coincides with rise in Binance’s

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The Chinese crackdown on cryptocurrency-related activities has had a serious impact. As a result, Huobi, which happens to be one of the largest cryptocurrency exchanges in the country, has been introducing stricter restrictions on its platform.

Due to concerns surrounding regulatory policies in China, in order to protect the interests of investors,Huobi had temporarily stopped a major chunk of services in derivatives trading such as futures contracts, exchange-traded products and other leveraged investment products to new users.

This, in turn, has facilitated exposure to other global exchanges as Chinese users now look for alternatives. Binance, for one, may see an influx of new users from the region. Along the same line, the well-known crypto journalist, Colin Wu, speculated,

“Huobi, China’s largest exchange, is afraid of regulation and actively restricts future functions, causing users to go to Binance. Binance’s futures trading volume has surpassed that of other exchanges. However, Binance may be too large to face a similar situation like derivatives exchange Bybit, that is, governments of various countries have successively warned and cracked down.”

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Huobi's decline in market share coincides with rise in Binance's 2

Huobi’s diminishing market share in derivatives realm

For a long time, Huobi has battled to clinch the supremacy title in the country. Meanwhile, OKEx, which happens to be another exchange, has dominated the derivatives scene but Huobi, for the most part of 2020, remained tied with the long-standing giant BitMEX. In recent times, however, the market dynamics have changed considerably. While Binance always had more futures volume than Huobi, Wu pointed that the rise in the former’s market share coincided with the decline in the latter’s market share.

According to the latest charts compiled by data provider Skew, Binance was ranked number one, and has dwarfed other derivatives exchanges in terms of Bitcoin futures volume as well open interest [OI], closely trailing behind was OKEx. Huobi, on the other hand, slipped to the fourth position in terms of BTC futures volume and was ranked sixth in respect to BTC open interest.

Traders Keep Bitcoin’s Avg Funding Rate For Perpetual Swaps Low

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Another week, another all-time high for Bitcoin. And as usual, shortly after pulling an astounding rally a new water higher mark of $58,000, the world’s largest crypto-asset retraced its steps back and was currently trading at $54,879.

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Traders Keep Bitcoin's Avg Funding Rate For Perpetual Swaps Low 6

With this Bitcoin’s YTD gains now stood at around 86%. Despite this, the blockchain intelligence platform, Glassnode, noted that there has not been any significant increase in funding rates yet. The average funding rate for perpetual swaps across major exchanges was found to be around 0.05%.

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Traders Keep Bitcoin's Avg Funding Rate For Perpetual Swaps Low 7

So what does this mean for Bitcoin?

Firstly, the reason for a lack of increase in the funding rates could indicate that the market participants are more keen in buying Bitcoin in the spot markets rather than using leverage.

The investors doing BTC perpetual swaps are not yet ready to enter short positions as the market kept soaring. In short, these participants do not view a potential damaging plunge in the near-term. This was evidenced by the average funding rate which remained a little over zero.

Hence, it can be drawn that investors and traders expect the market to move higher.

Soaring Trade Volume

Moreover, Bitcoin’s trading volume on spot exchanges has climbed significantly after surging above $50K. As the figures for trade volume on spot exchanges continue to rise even at the current price level, it is likely that the said region may become crucial support for Bitcoin in the near-term.

Reversal would be damaging

It was a watershed moment for Bitcoin when it climbed a $1 trillion market cap due to increased institutional inflow. And here’s why the fear of a damaging reversal lingers.

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Traders Keep Bitcoin's Avg Funding Rate For Perpetual Swaps Low 8

Going by the derivatives chart, it can be noted that open interest [OI], as well as a trading volume, continue to cut through new levels for BTC futures across exchanges, hence there is a probability that if the price were to correct below $50000, it may trigger a slew of liquidations and have a long-term negative impact on the price.

Bakkt Volume Smashes Previous Record, Hits New ATH at $147 Million

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Almost a month after breaking its record twice in two consecutive days, volumes on Bitcoin futures offered by Intercontinental Exchange [ICE] subsidiary, Bakkt, hit yet another milestone.

The institutional investing platform registered its highest-ever figure of $147 million in volume with 12,791 contracts traded on 25th August, as per the data from the crypto-analytic site, Skew. As compared to its previous high in July for Bitcoin’s monthly futures, Bakkt’s figures were up by 15%.

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On the other hand, the open interest [OI], which is an indicator of the total number of outstanding contracts held by investors, declined and was found to be at $9.5 million. This may be due to the fact that the latest move followed a correction in the underlying asset price that plunged to $11,397 as opposed to its previous high, which was driven by Bitcoin breaking the almost three-month range-bound trading channel.

Bakkt’s physically-settled contracts which are paid out in BTC registered a volume of $134 million while its cash-settled contracts, which are delivered in US Dollars, accounted for $13 million.

However, New York Stock Exchange-owned Bakkt wasn’t the only institutional exchange that recorded a new peak. Its rival, Chicago Mercantile Exchange [CME] also saw nearly a month-high surging to a volume of $935 million while its open interest was found to be at $713 million, according to data from Skew Analytics.

skew cme bitcoin futures total open interest volumes

Leading cryptocurrency exchange and derivative platform, OKEx‘s ‘BTC Top trader sentiment index’ also spiked to 0.59 as volumes rose to $4.5 billion despite a low open interest. However, these figures were still negligible when compared in a macro aspect of the derivatives market.

The aggregated daily volume of the collective derivatives platform, as noted by Skew, suffered from poor figures in August. It continued to remain below $20 billion for the most part of the month since the underlying asset’s price sustained major corrections and failed to breach $12,000 despite multiple breakout attempts.

However, with the latest surge, the aggregated daily volume also rose, though not significantly, to $17 billion, a level that was last seen on 19th August when Bitcoin’s price soared to $12,278. Could this spur a rally for Bitcoin in the near-term?

Brazil’s Regulator Orders Binance to Stop Providing Crypto Derivatives

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Brazil ‘s financial regulator, the Securities and Exchange Commission, which is commonly known as CVM, has prohibited Binance ‘s giant trading platform from offering cryptocurrency derivatives in the country. According to the authority, derivatives are cryptos or underlying assets, which are considered to be securities.

As such, Binance is required to register with CVM in order to secure an operating license to offer crypto derivatives. The Binance Exchange Platform does not, however, hold such a license to operate as a securities intermediary in Brazil. Indeed, the regulator’s notice points to the growing interest of the investor in cryptocurrency derivatives.

Growing investor interest in the crypto derivatives market

Crypto derivatives allow investors to bet on the market value of cryptos without the need for an actual token. Caution also follows a period when the majority of vital cryptocurrency spots begin to focus on public crypto derivatives offerings on the market, such as BitMEX. For instance, Binance launched a trading margin functionality.

Crypto derivatives offered by Binance aim to form a market that imitates the traditional markets sub-structure. Binance primarily focuses on integrated investment products to drive cryptocurrency adoption in the form of crypto derivatives. As of now, Binance is yet to respond to the ban. Furthermore, the ban will directly impact traders who deal with crypto derivatives in Brazil. The order by CVM reads: 

“It remains evident that the company Binance Futures, through the webpage ‘www.binance.com,’ captures customers residing in Brazil with a public offering of derivative intermediation services…; the aforementioned company does not hold authorization from this Securities and Exchange Commission to act as a securities intermediary.” 

Brazilians not missing cryptocurrency trend

Brazil has off late been a hive of crypto activities in recent years. Brazilians are yet to miss crypto-related trends in the nation. Indeed, in the LATAM region Brazil was the top country in terms of both policing and innovation. In conclusion, Brazil’s journey towards crypto oversight took an additional step in 2019 after the lawmakers formed a commission to contemplate the subject.