From the outside looking in, the global futures trading market has continued to experience a high degree of growth, setting new records year after year, especially since the turn of the last decade. During 2023 alone, the sector recorded a staggering 137.3 billion contracts traded, marking a 64% increase from the year prior — representing the sixth consecutive year of record-setting volumes.
Similarly, it bears mentioning that the total number of futures contracts rose from 12.13 billion contracts in 2013 to over 29.32 billion in 2022, driven by factors such as enhanced liquidity and the diversification of trading strategies among market participants.
Amidst these numbers, the crypto futures market, in particular, demonstrated growing consumer interest. In Q2 2023, the market registered an average daily volume (ADV) of 80,600 contracts — helmed largely by Bitcoin and Ether futures. In fact, Bitcoin futures saw an average daily volume (ADV) of approximately 13,200 contracts, while Ether futures averaged around 5,100 contracts daily.
Crypto futures products open interest (OI) (source: CME)
The numbers don’t lie.
This momentum continued into 2024, with Ether futures achieving record open interest of 7,600 contracts (valued at $1.3 billion) on June 24, and a remarkable $2.85 billion traded on May 21. Additionally, Micro Ether futures recorded an average daily volume of 28,900 contracts in June 2024.
By mid-2024, Ether futures achieved a record open interest of 7,600 contracts, translating to a notional value of $1.3 billion. The introduction of new products like Ether/Bitcoin Ratio futures also contributed to increased trading volumes, with over $260 million in notional value traded as institutional interest in these derivatives grew significantly throughout the year.
Within this burgeoning landscape, one platform that has made tremendous advances is VALR. Founded in 2018, the company has quickly established itself as South Africa’s largest cryptocurrency exchange, offering a comprehensive suite of services, including spot trading, margin trading, perpetual futures, and staking products to over 600,000 retail customers and more than 1,000 institutional clients globally.
Moreover, VALR’s recent approval to offer crypto asset services in several key regions has marked a significant milestone in its international growth strategy, with the company recently securing permission to offer crypto asset services in Poland. Additionally, VALR has obtained initial approval from Dubai’s Virtual Asset Regulatory Authority (VARA) (while also pursuing licensing deals in Mauritius).
As is clear by these precedents, what sets VALR apart from the rest of the fray is its commitment to regulatory compliance and security. As one of the first crypto exchanges to receive dual licensing from South Africa’s Financial Sector Conduct Authority (FSCA), the platform has positioned itself as one of the trustworthy options in this rapidly evolving arena.
Not only that, this regulation-friendly approach has allowed VALR to attract a significant portion of its trading volume from institutional clients, for whom the company has tailored its services with features like comprehensive APIs and enhanced security measures.
Lastly, as per reports, the company is eyeing opportunities in several rapidly growing economies like Nigeria, Kenya, Ghana, and Egypt while simultaneously making inroads into Asia and Europe.
The future for crypto derivatives looks extremely promising.
As per Matthew Sigel, Head of Digital Assets Research at VanEck, the digital asset derivatives market is primed for exponential growth in the near term — particularly Bitcoin futures. He noted that equity and commodity derivatives are 279 times larger than Bitcoin’s relative to their underlying markets, suggesting substantial room for growth in the crypto derivatives sector.
The recent approval of options trading for BlackRock’s iShares Bitcoin Trust (IBIT) by the US Securities and Exchange Commission is expected to catalyze this growth further. As one of the most liquid ETFs in the country, IBIT’s options trading is likely to attract more liquidity and institutional investors to the Bitcoin market.
Derivatives market size in relation to underlying market size (source: K33 Research)
Also, while the Bitcoin derivatives market has grown considerably in recent years, it remains modest compared to traditional markets. Monthly crypto derivatives volumes have surpassed spot markets, reaching $1.33 trillion, with Bitcoin and Ethereum being the most frequently referenced assets.
That said, the increasing regulatory acceptance and introduction of new products like physically settled options and non-deliverable forwards indicate ongoing innovation and maturation in the sector.
Thus, with the crypto derivatives market continuing to evolve, platforms like VALR are well-positioned to help users capitalize on these opportunities. With its robust infrastructure, commitment to regulatory compliance, and global expansion plans, VALR stands at the forefront of making crypto futures trading accessible to a wider audience — potentially ushering in a new era of digital finance. Interesting times ahead!
