Binance and FTX Will Dominate Bitcoin Futures In 2022, But DEX Gains Power As Well

Large cryptocurrency exchange Binance will continue to dominate the Bitcoin (BTC) futures market in 2022, with competition from FTX heating up. At the same time, stricter rules mean that all centralized exchanges will face decentralized alternatives in the new year. predicted crypto researcher Arcane Research .

A new report from Arcane Research says that over the past year, activity in the bitcoin futures trading market has undoubtedly been driven by Binance. The report said that the exchange, which originally started out as a spot, was the largest open-interest bitcoin futures exchange for 308 days out of 360 covered, and also showed that the trend of Binance’s market share was increasing. during a year.

But while a popular exchange is gaining market share from some competitors, others are struggling. The most notable of these is FTX, which has seen a growing share of open interest in the bitcoin futures market over the past year.

Looking into the crystal ball the next year, Arkane said that:

Binance will maintain its position as the largest Bitcoin futures exchange in terms of open interest, but will also face stiff competition from the FTX.

After consistently growing its market share throughout 2021, FTX’s market share in Bitcoin futures trading in December was nearly identical Chicago Mercantile Exchange (CME) p more institutional dominance , while both exchanges accounted for 15% to 20% of the total open interest. …

Bitcoin Futures Open Interest on Binance, CME and FTX in 2021:

In 2022, Arcane predicted that this will be the year that derivatives trading on decentralized exchanges (DEX) becomes more mainstream and attracts futures traders through traditional centralized exchanges such as Binance and FTX.

The report says the market will face even tighter regulation, making it difficult to maintain the modus operandi as a free port for anyone looking to trade with high leverage.

He added that for this reason, decentralized derivatives exchanges will attract more traders, despite the associated protocol risk.

Critical signal for the Bitcoin options market

In the other major segment of the derivatives market, the Arcane options market said it has grown in importance.

The report says that options flows are becoming an increasingly important signal from the market, adding that several options market indicators are now widely used to gauge the overall health of the bitcoin market.

The report also notes that the exchange Deribit cryptoderivatives strengthened its position as the dominant Bitcoin options platform until 2021. Since the beginning of the year, the share of open-interest exchanges in the bitcoin options market has grown from 82% to over 90% at the end of December, the report said.

Looking into 2022, Arcane predicted that Deribits’ position would be called into question as new competitors emerge from the legacy financial system known in crypto circles as TradFi.

Arcanes predicts that Deribit will face increased competition from tradfi marketplaces.