Tokenized perpetual swaps hit $31 billion weekly volume on commodities volatility

coindesk.com 1 h

Exchange

Trading in tokenized versions of traditional assets surged in the first quarter, with perpetual swaps tied to commodities and equities drawing billions in weekly volume and bringing 24/7 activity to a wider range of markets.

Weekly trading volume of such assets jumped to $30.7 billion, or 1.72% of the total crypto derivatives market, by end-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 powered the rise. Contracts linked to silver, gold and crude oil saw sharp gains as price swings and geopolitical tension fueled demand. Oil trading alone climbed to $6.9 billion in weekly volume after the U.S.-Israel strikes on Iran started Feb. 28, prompting a surge in round-the-clock oil trading volumes.

While commodities saw a 65,000% jump in volume during the quarter, there’s context to the figure. Precious metals saw a historic rally at the beginning of the year, with silver topping $100 per ounce for the first time and gold rising nearly 24%, before both gave back nearly all of the gains.

Equities saw a similar breakout. Perpetual swaps tied to stocks grew 908% over the quarter to roughly $4.9 billion in weekly volume, BitMEX found.

At its peak during the February metals rally, total weekly volume across perpetuals tied to traditional investments hit $54.5 billion.

The price of oil started surging at the outbreak of hostilities with Iran, given the country's control of the Strait of Hormuz, a vital passageway through which roughly 20% of the world’s oil flows.

Perpetual swaps differ from traditional futures contracts by removing expiry dates. Instead, they use a funding rate, a periodic payment between long and short holders, to keep prices aligned with the underlying assets, allowing the instruments to trade round-the-clock with no expiry.

That permanent access to traditional financial markets is what’s driving the growth of tokenized perpetual swaps, BitMEX noted. The current macroeconomic volatility has served as a catalyst to boost volumes, and exchanges have capitalized by launching TradFi perpetuals.