The demand for cryptocurrencies among active traders is on the rise, with crypto Contracts for Differences (CFDs) witnessing significant growth at the retail brokerage Axi.
According to data obtained by Finance Magnates, Axi’s crypto CFD volumes nearly doubled in January, reaching an impressive $12 billion.
This surge in popularity is further highlighted by the fact that the brokerage was processing approximately 70,000 crypto trades each week.
Throughout most of 2023, Axi typically handled crypto volumes ranging from $1 billion to $2 billion. However, in December, there was a substantial and sudden surge, with volumes skyrocketing to $6 billion.
One possible contributing factor to this increased activity is the anticipation and subsequent approval of spot Bitcoin exchange-traded funds (ETFs) in the United States.
Prior to the approval of 11 spot Bitcoin ETFs by the US regulator, the price of Bitcoin experienced significant volatility, briefly reaching $48,000. However, the rally proved short-lived, as the Bitcoin price dropped shortly after the ETFs received official approval.
Initially, the net inflows into Bitcoin ETFs fell short of analysts’ expectations.
Additionally, Grayscale’s Bitcoin ETF, which had converted from a closed fund, experienced a substantial outflow.
Nevertheless, over time, investor interest in these instruments grew, as evidenced by increasing inflows into these ETFs.
Axi, headquartered in Australia, exclusively offers crypto CFDs featuring 30 of the most popular cryptocurrencies, including Bitcoin, Ethereum, Litecoin, Ripple, and Bitcoin Cash.
These derivative instruments allow traders to take both long and short positions on the underlying digital assets.
Axi operates under two entities: one regulated in Australia and the other incorporated and authorized by the regulator in St. Vincent and the Grenadines.
While the Australian entity offers leverage of up to 2:1 to its clients, the offshore unit provides significantly higher leverage, reaching up to 200:1 leverage, as stated on the Axi website.
The lower leverage offered by the Australian unit is a result of regulatory limitations introduced by the country’s financial services regulator in 2021.
It’s worth noting that Axi’s crypto CFD demand, while impressive, remains a fraction compared to the trading volumes on dedicated crypto spot and derivative exchanges.
For instance, Binance processed $39.8 billion in crypto derivatives and $14.3 billion in spot volumes in the last 24 hours.
Similarly, Bybit and OKX managed $13.6 billion and $15.4 billion in crypto derivatives, respectively, within the same one-day period.
While various retail brokers offer cryptocurrency CFDs in different jurisdictions, only a few disclose volumes and other relevant metrics associated with these instruments.
In October, the offshore broker Titan FX revealed that it had handled $2 billion in crypto CFDs volume in a single day.
In 2021, Denmark-based Saxo Bank began offering crypto CFDs in select Asia-Pacific countries and generated $2.5 billion in turnover from digital assets in the first six months.
However, the bank did not publicly update these numbers further.