The cryptocurrency derivatives market is experiencing a surge in activity, largely driven by the rise of onchain perpetual futures trading. This trend signifies a shift in the digital asset landscape, with derivatives establishing themselves as a primary venue for price discovery and risk management.
In 2025, the total trading volume of the cryptocurrency derivatives market reached approximately $85.70 trillion, with a daily average turnover of about $264.5 billion. Perpetual contracts continue to dominate, accounting for 78% of the total crypto derivatives trading volume. This preference is due to the uninterrupted exposure they offer, which is particularly valuable in the volatile crypto environment.
Several factors are contributing to this surge. One key element is the increasing participation of institutional investors. As the crypto market matures, institutional capital has become a main growth driver. These investors are utilizing derivatives for hedging and basis trading, connecting traditional financial interest rates with crypto-native yields. CME Group, for instance, has consolidated its dominance in Bitcoin derivatives, surpassing Binance in BTC futures open interest.
Another significant factor is the growth of decentralized perpetual exchanges (Perps DEXs). These platforms offer self-custody, transparency, and permissionless perpetual futures trading. Unlike centralized exchanges, decentralized perpetuals settle trades on-chain, minimizing counterparty risk and ensuring global accessibility. Platforms like Hyperliquid, GMX, and dYdX are gaining traction by offering deep liquidity, competitive fees, and efficient execution without relying on centralized intermediaries. For example, Hyperliquid consistently handles $4–6 billion in daily trading volume. In October 2025 alone, perpetual DEXs processed US$1.3 trillion in volume.
The rise of on-chain derivatives also provides a functional alternative to centralized derivatives, particularly regarding censorship-resistant trading and the execution of composable strategies. Gate.io launched Gate Perp DEX, a decentralized perpetuals exchange built on Gate Layer, which processed over $1 billion in trading volume following its launch. This highlights the emerging trend where exchanges offer both custodial and non-custodial trading options.
However, the growth in crypto derivatives is not without its challenges. High leverage and liquidity concentration can lead to systemic risks and market instability. In October 2025, the crypto market experienced a large wave of liquidations, exceeding $19 billion in a single day, triggered by Bitcoin's volatility. Moreover, a large crypto trader expanded existing shorts by opening new positions worth approximately $119m in Bitcoin, $106m in Ethereum and $43m in Solana. The trades were executed via perpetual futures, indicating a derivatives-led positioning strategy rather than outright spot selling.
Despite these risks, the crypto derivatives market is expected to continue its growth trajectory, driven by institutional adoption, technological advancements, and evolving regulatory frameworks. The development of regulated infrastructure and the expanding role of institutional players are expected to reduce risks and make the market more predictable. As decentralized derivatives platforms continue to innovate and offer more sophisticated trading tools, they are likely to play an increasingly important role in the broader crypto ecosystem.
