Cryptocurrency Investors Increase Derivatives Portfolio Amid Market Rising Momentum

The market regained its vitality in October, and the total market capitalization of cryptocurrencies rose 13% from $2 trillion to $2.3 trillion. Several data points indicate that retail investors are more actively participating in trading. However, they are choosing to trade derivatives rather than focus on spot trading on exchanges. Rapid increase in on-chain activity of retail cryptocurrency investors By tracking Bitcoin transactions under $10,000, we can gauge retail investor demand. According to CryptoQuant's data, retail demand tends to drive Bitcoin price increases. Over the past 30 days, retail demand has increased by 13%, which is a phenomenon seen after four consecutive months of negative growth. Analyst Caueconomy suggests this is similar to the scenario seen in March. "Retail demand has increased by about 13% over the past 30 days, highlighting a scenario that was only seen in March when it was near the last historical peak... This recent Bitcoin rally signals the return of small investors to trading, signaling the start of a low-risk aversion pattern," Caueconomy said. Additionally, the number of weekly active stablecoin addresses reached a new 3-year high in October. The weekly active stablecoin addresses reflect the increased activity in stablecoin trading. This figure consistently remained above 8 million per week in September and reached 8.6 million last week. Surge in derivatives trading in October Despite the noticeable increase in retail on-chain activity, spot trading volume on centralized exchanges (CEXs) remained stable. According to CoinMarketCap data, the daily spot trading volume on exchanges fluctuated between $50 billion and $100 billion. However, derivatives trading volume has surged over the past two months. In October, the total open interest exceeded $260 billion, reaching a 1-year high. This suggests that retail investors may be more interested in derivatives trading than spot trading. On the other hand, investor Lark Davis observed that interest in cryptocurrency searches has not seen a significant breakout. This indicates that while retail investors have returned, they are primarily focused on derivatives trading. "Current Google Trends show retail interest in cryptocurrencies is at a minimum. Retail is sleeping, and institutions are accumulating," Davis said.