Trading in tokenized versions of traditional assets surged in the first quarter, with perpetual swaps related to commodities and stocks transacting billions of dollars each week and bringing 24/7 trading to broader markets.
Weekly trading volume for these assets soared to $30.7 billion (1.72% of the total crypto derivatives market) by the end of March, according to a report released Thursday by cryptocurrency exchange BitMEX. This is up from 0.03% in December, according to the exchange, which developed the tool in 2014.
Commodities were the driving force behind the rally. Contracts related to silver, gold and crude oil rose sharply as price volatility and geopolitical tensions stimulated demand. After the US and Israeli attacks on Iran began on February 28, 24-hour oil trading volumes soared, with weekly trading volume in crude oil trading alone increasing to $6.9 billion.
Commodity trading volumes rose 65,000% during the quarter, but there’s some context behind this number. Precious metals started the year with historic gains, with silver topping $100 an ounce for the first time and gold rising nearly 24%, but both have since given back almost all of their gains.
A similar breakout was seen in the stock market. According to BitMEX research, perpetual swaps related to stocks rose 908% quarter-over-quarter to approximately $4.9 billion in weekly trading volume.
At the peak of the metals market rally in February, the total weekly volume of permanent sales related to traditional investments reached $54.5 billion.
Oil prices began to soar with the outbreak of war with Iran, as the country gained control of the Strait of Hormuz, an important passageway through which approximately 20% of the world’s oil flows.
Perpetual swaps differ from traditional futures contracts by removing the expiration date. Instead, it uses funding rates, or periodic payments between long and short holders, to match the price to the underlying asset, allowing the instrument to be traded 24 hours a day with no expiration date.
Permanent access to traditional financial markets is driving the growth of tokenized perpetual swaps, BitMEX noted. The current macroeconomic instability is acting as a catalyst to increase trading volumes, and exchanges are benefiting by launching TradFi perpetual trading.
