Industry News

Binance Contract Trading Monthly Report 2021-1

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Update time : 2021-05-29 14:50:58
According to data from CoinMarketCap, from the beginning of this year to April, the total market value of Bitcoin and other crypto assets doubled to $2.2 trillion.

As of April 30, the total market value of 9192 crypto assets tracked by the CoinMarketCap website reached $2.2 trillion, an increase of 16.7% from March.

Bitcoin, the world's largest crypto asset by market value, experienced great ups and downs in April, and fell to $46,930 after hitting a record high of $64,854 on April 14. Therefore, as of the end of April, the price of Bitcoin has fallen slightly, down 1.78% from March.

The sell-off of Bitcoin brought the BTC-dominant index to its lowest level in nearly two years, falling below 48% for the first time since July 2018. Since the beginning of this year, the Bitcoin dominance index has been plummeting. Market dominance assesses how the market value of a particular currency stacks up with the total market value of tradable crypto assets.

According to data from CoinMarketCap, year-to-date, the market value of non-bitcoin currencies has grown from less than $250 billion to $1.1 trillion. Although most non-bitcoin currencies followed the Bitcoin bull market and rose, only a few performed best. Non-bitcoin currencies such as Ethereum, BNB and Cardano have caused the most damage to Bitcoin's dominance.

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In contrast, the smart contract giant Ethereum performed well this month, with an increase of more than 44%. As of the end of April, Ethereum has risen by more than 320% so far. As of the publication of this article, its market value reached 350 billion U.S. dollars.

Ethereum traded at $2,798 on April 30, and has continued to rise since then. As of the publication of this article, the trading price of ETH hit an all-time high of $3,527 on May 4.

The resilience of Ethereum can be attributed to its strong on-chain activity, because despite the challenges, the Ethereum network continues to grow. According to data from the data analysis provider Glassnode, the number of smart contracts locked in ETH has almost doubled in the past year, from 12% of ETH supply to more than 23% today.

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As more and more Ethereum is locked by smart contracts, its supply on the trading platform continues to decline. Currently, it is less than 13.5 million Ether, which is the lowest point in a year. Overall, this indicator has fallen by 27% in the past year, indicating that the market's demand for ETH is increasing.

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As the Ethereum network is about to upgrade, investors are currently generally optimistic about Ethereum. Ethereum Improvement Proposal 1559 (or EIP-1559 for short) will be launched on July 14 as part of its scheduled London hard fork. The EIP-1559 upgrade aims to solve the problem of Ethereum's rising miner fees. This upgrade will change the way these fees are calculated and distributed to miners. After the upgrade is completed, Ethereum will "burn" a portion of ETH mining fees to help reduce the cost of operating Ethereum smart contracts. As a result, the total supply of ETH will decrease, which some analysts believe will lead to more demand for ETH than supply.

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BNB continued to set new highs, with an increase of 105% in April. On April 30, the transaction price of BNB was $622. BNB is one of the best performing crypto assets so far this year, with an astonishing 1544% increase. BNB's incredible rebound made it the third largest crypto asset by market capitalization.

The recent rise of BNB is driven by the continued growth of Binance Smart Chain (BSC). According to data from BSCscan, the number of daily transactions on the BSC network has exceeded that of the ETH network (comparison date: May 2), with 8.4 million transactions and 1.4 million transactions respectively. Ethereum's high miner fees are still a problem for all vertical industries, so multiple DeFi, NFT, and game Dapps announced that they will expand to other chains.

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The dominant narrative in this field is still the emergence of the multi-chain paradigm. Ethereum's competitors are as active as ever. BSC proved to be the biggest competitor of Ethereum because several top DeFi Dapps have already migrated or announced their migration to BSC. It is worth noting that the total value of assets locked in the BSC DEfi ecosystem has increased 46 times since the beginning of the year.

Despite Bitcoin's poor performance, contract trading volume hit a new high

In April, the trading volume of Binance contracts reached US$2.14 trillion, a sharp increase of 54% from March. On April 23, the 24-hour trading volume of Binance contracts hit a record high, and the value of the processed contracts reached US$121 billion.

As Bitcoin hit a record high of $64,500, Bitcoin's holdings on the Binance trading platform also reached a new milestone, reaching $13.4 billion on April 16. However, as Bitcoin fell below $47,500, traders were forced to close BTC leveraged long positions due to liquidation losses. As a result, Bitcoin holdings fell to 9.2 billion U.S. dollars and rebounded slightly to 9.7 billion U.S. dollars at the end of April.

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Unsurprisingly, the leading index of Bitcoin holdings (the ratio of Bitcoin contract holdings to the total holdings on Binance) showed a downward trend throughout April. On April 17, the leading index of Bitcoin holdings fell from 43.7% to 36.3%, and rose to 37.6% at the end of April.

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In April, non-bitcoin currency contracts drove the growth of most open positions, making heavyweight non-bitcoin currencies such as Ethereum and BNB the focus of attention. The substantial growth of non-bitcoin currencies in recent weeks has shifted investors' attention to their respective contracts, especially Ethereum contracts, whose trading volume and open interest have increased.

Will Bitcoin catch up with non-Bitcoin currencies?

Despite the poor performance of Bitcoin, it has surpassed traditional assets such as gold and stocks, with a year-to-date return of more than 100%. In the long run, the returns generated by traditional assets in the same period are as follows:

Crude oil +37%
S&P 500 Index +13%
Nasdaq +9.2%
Silver -1.6%
Gold -9%
Source: Tradingview, deadline: April 30, 2021.

Encrypted assets are undoubtedly the best performing assets this year, and their gains are attributed to more and more well-known institutional investors accepting encrypted assets.

Institutions are pushing the adoption of encrypted assets to new heights. PayPal has launched an encrypted asset checkout service, a new feature that will significantly expand the payment of encrypted assets. PayPal customers holding crypto assets in the United States will be able to pay with their preferred crypto assets such as Bitcoin, Litecoin, Ethereum or Bitcoin Cash.

At the same time, more traditional banks and asset management companies announced plans to expand their crypto asset investment products. For example, Goldman Sachs (Goldman Sachs) is said to have begun offering investment tools in Bitcoin and other digital assets to clients of its private wealth management department.

Until now, traditional banks have largely avoided using Bitcoin, believing that Bitcoin is too speculative and unstable for customers. However, the recent surge in Bitcoin has triggered increased demand from institutional investors, businesses and financial technology companies, leaving banking giants no choice but to follow the trend.

Although we cannot predict whether the current bull market will last until 2022, we can confidently say that the positive development of the entire crypto-asset economy this year will not disappear anytime soon. Large institutional investors are beginning to pay attention to the value of digital assets. They will continue to increase investment and push our industry to new heights.

This year, as crypto assets become more mainstream, the crypto asset revolution has just begun. The post-epidemic world will usher in a new digital economy that spans many industries. This economic form may be supported to increase the adoption rate of encrypted assets.