Trading in tokenized versions of traditional assets surged in the first quarter, with perpetual swaps linked to commodities and stocks attracting billions in weekly volume and bringing 24/7 activity to a wider range of markets.
Weekly trading volume of these assets jumped to $30.7 billion, or 1.72% of the total crypto derivatives market, at 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 fueled the rise. Contracts linked to silver, gold and crude oil saw sharp gains as price swings and geopolitical tensions fueled demand. Oil trading alone soared to $6.9 billion in weekly volume after the start of US-Israeli strikes on Iran on February 28, causing 24-hour oil trading volumes to surge.
Even though commodities saw a 65,000% increase in volume during the quarter, this number is contextual. Precious metals enjoyed a historic rally earlier this year, with silver surpassing $100 an ounce for the first time and gold rising nearly 24%, before both gave up almost all of the gains.
Stocks experienced a similar breakout. Perpetual equity-linked swaps increased 908% during the quarter to weekly volume of approximately $4.9 billion, according to BitMEX.
At its peak during the February metals rally, total weekly volume in perpetual securities linked to traditional investments reached $54.5 billion.
The price of oil began to soar with the outbreak of hostilities with Iran, given that country’s control of the Strait of Hormuz, a vital passage through which about 20 percent of the world’s oil passes.
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 aligned with the underlying assets, allowing instruments to trade 24 hours a day without expiration.
BitMEX noted that this ongoing access to traditional financial markets is driving the growth of tokenized perpetual swaps. The current macroeconomic volatility has served as a catalyst to increase volumes, and exchanges have taken advantage by launching TradFi perpetuals.
