Trading in tokenized versions of traditional assets surged in the first quarter, with perpetual swaps linked to commodities and stocks generating billions in weekly volume and bringing 24/7 activity to a broader range of markets.
Weekly trading volume for such assets jumped to $30.7 billion, or 1.72% of the total crypto derivatives market, at the end of March, cryptocurrency 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 fueled the rise. Contracts linked to silver, gold and crude oil posted strong gains as price swings and geopolitical tensions boosted demand. Oil trading alone rose to $6.9 billion in weekly volume after the US and Israeli attacks on Iran began on February 28, causing a surge in oil trading volumes around the clock.
While raw materials saw a 65,000% increase in volume during the quarter, the figure has context. Precious metals experienced a historic rally at the start of the year, with silver topping $100 per ounce for the first time and gold rising nearly 24%, before both gave up almost all of the gains.
Stocks experienced a similar breakout. Equity-linked perpetual swaps grew 908% during the quarter to about $4.9 billion in weekly volume, BitMEX found.
At its peak during the February metals rally, total weekly volume of perpetual securities linked to traditional investments reached $54.5 billion.
The price of oil began to rise with the outbreak of hostilities with Iran, given the country’s control of the Strait of Hormuz, a vital passage through which approximately 20% of the world’s oil flows.
Perpetual swaps differ from traditional futures contracts in that they eliminate expiration dates. Instead, they use a funding rate, a periodic payment between long- and short-term holders, to keep prices aligned with the underlying assets, allowing instruments to be traded 24 hours a day without expiration.
BitMEX noted that such permanent access to traditional financial markets is what is driving the growth of tokenized perpetual swaps. The current macroeconomic volatility has served as a catalyst for increasing volumes, and exchanges have capitalized with the launch of TradFi perpetuals.
