Bitcoin, by far the largest digital currency, is not starved for attention, but that does not mean trading volume in the cryptocurrency is always robust.
In fact, some data points suggest that when the price of the digital currency falls, so does its volume.
“The average number of trades recorded daily has roughly dropped in half from the December highs and touched its lowest in two years last month, even as Bitcoin became a household name and roared back above $10,000,” reports Bloomberg.
Bitcoin futures debuted on the Cboe in December, followed by a launch on the CME. Nasdaq Inc. is still considering entering the bitcoin futures competition. Market observers previously expected Nasdaq to launch futures on the digital currency this year, perhaps as early as the second quarter.
However, bitcoin futures volume is not yet taking off due in part to the large margin requirements associated with these derivatives. Derivatives help increase liquidity and improve markets for an asset category by allowing investors to bet on ups and downs of an asset, evening allowing individuals to adopt market-neutral strategies.