Trading in tokenized versions of traditional assets surged in the first quarter, with perpetual swaps tied to commodities and stocks drawing billions in weekly volume and bringing 24/7 activity to a wider range of markets.
Weekly trading volume for such assets jumped to $30.7 billion, or 1.72% of the total crypto derivatives market, by the end of March, crypto exchange BitMEX said in a report published Thursday. That’s up from 0.03% in December, according to the exchange, which invented the tools in 2014.
Commodities drove the increase. Contracts linked to silver, gold and crude oil saw big gains as price volatility and geopolitical tensions fueled demand. Oil trading alone rose to $6.9 billion in weekly volume after the US-Israel attack on Iran began on February 28, prompting a surge in around-the-clock oil trading.
While commodities saw a 65,000% jump in volume during the quarter, there is consistency in the numbers. Precious metals saw a historic rally at the start of the year, with silver topping $100 an ounce for the first time and gold rising nearly 24% before both gave back nearly all of their gains.
Stocks experienced a similar breakout. Perpetual swaps tied to stocks grew 908% during the quarter to about $4.9 billion in weekly volume, BitMEX found.
At its peak during the metals rally in February, total weekly volume across perpetuities tied to traditional investments reached $54.5 billion.
Oil prices began to rise at the outbreak of hostilities with Iran, given the country’s control of the Strait of Hormuz, a vital passage through which about 20% of the world’s oil flows.
Perpetual swaps differ from traditional futures contracts by removing expiration dates. Instead, they use a funding rate, a periodic payment between long and short holders, to keep prices in line with the underlying assets, allowing the instruments to trade around the clock without expiration.
That permanent access to traditional financial markets is what drives the growth of tokenized perpetual swaps, BitMEX noted. The current macroeconomic volatility has served as a catalyst to increase volume and exchanges have taken advantage by launching TradFi perpetuals.
