Crypto derivatives maintain their popularity as bear market in full swing

The cryptocurrency bear market in 2022 is Worst on record Because most bitcoin traders are underwater and continue to sell at a loss. In response to the rapid decline in token prices, some investors have fled to safe-haven assets; some have exited the market entirely, while others have turned inexplicably to the arcane crypto derivatives market.

About this, Cointelegraph spoke to BingX’s head of brand, Emerson Li. BingX is a Singapore-based social-based cryptocurrency exchange known for its leaderboards, where users can compete with others for investment returns and share ideas among followers. The exchange processed about $319 million in trading volume in the past 24 hours, mainly including derivatives. Here’s what Lee had to say about the recent market downturn:

“BingX is also seeing a surge in users; Q2 saw a 70% increase in users compared to Q1 2022, and transaction volumes have doubled since the current downturn. We think its demand for derivatives is still increasing , because it allows users to profit from lower prices, a feature that other products don’t have.”

During a bear market, traders can buy Derivatives called put options Either hedge the position or speculate that the value of the underlying token will fall. While this can be done by simply shorting the coin, violent and periodic bear market rallies can lead to theoretically unlimited losses on short positions. Additionally, the lack of liquidity for shorting borrowed currencies can lead to exchanges charging high interest rates on their positions. On the other hand, a put buyer’s loss is theoretically limited to the premium they paid for the derivative, and there are no additional interest charges.

Li went on to explain that deposits at BingX have also increased dramatically recently. “As high volatility suits the derivatives market, we are seeing more users participating in such trades and stimulating more demand for deposits.”

Funds also appear to be flowing from DeFi protocols back to CeFi products. “For high-risk products such as DeFi staking, we believe traders have panicked under the recent market, influenced by Terra (LUNA) – since rebranding to Terra Classic (LUNC) – events and Problems with many DeFi protocols. User risk appetite declines and demand declines. ” Lee said.

In fact, dYdX, a Decentralized cryptocurrency exchange Known for its margin and perpetual contract products, its weekly trading volume has dropped by around 90% from $12.5 billion witness October 24th to October 30th last year. However, trading volumes are still orders of magnitude higher than they were a year ago, in part due to the aforementioned risk-hedging tailwinds.

Risk-wise, the worst appears to be over Liquidation surges on dYdXMainly in the Ethereum and Bitcoin markets, which have dissipated since mid-June. Glassnode experts point out Tokens held in wallet address During the sell-off, both the number of new investors and crypto whales increased significantly.