Crypto derivatives trading volumes on the Binance exchange surged to six-month highs in July, signaling increased trading activity and potentially more volatility in the wake of recent market swings. 

Binance futures trading volumes hit $2.55 trillion in July, the highest level since January, reported CryptoQuant analyst J.A. Maartun on Tuesday.

“The jump in volume followed a month of sharp price moves in both Bitcoin and altcoins,” he said, referencing crypto’s all-time high market capitalization of $4 trillion that pulled back at the end of July. 

Other crypto derivatives providers, Bybit and OKX, also had strong activity, with $929 billion and $1.09 trillion in volume, but Binance was the largest by a wide margin, making up more than half of the total volume across all major exchanges, the analyst said. 

“The increase in trading suggests more users are active again, possibly due to the recent price breakout,” said the analyst.

Higher derivative market participation 

Binance is the market leader for crypto derivatives with the highest liquidity and most assets, offering 568 pairs. Its current daily trading volume is $82 billion, and it hit a four-month daily high of $134 billion on July 18, according to CoinGecko. 

Related: $100B Binance Futures volume backs traders’ ‘altseason’ claim

Higher futures volumes indicate more derivatives traders and institutions are actively participating in the market, and this often correlates with periods of significant price movement or market uncertainty.

Futures markets also play a crucial role in price discovery, as increased volume means more traders are expressing their views on future prices. Crypto futures are exchange-traded contracts that allow participants to speculate on the future price of an asset such as Bitcoin (BTC) or Ether (ETH) without actually owning the assets.

Open Interest remains high

Total Bitcoin futures OI (a measure of the total number or value of open contracts that have yet to be settled) remains high at around $79 billion. Still, it has fallen from its all-time high of $88 billion in mid-July, according to CoinGlass.

When OI gets too high, it is often followed by a leverage flushout, which can cause sharp drops in spot markets. 

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