Crypto derivatives trading became bigger than ever in March, even as its share of total market activity declined for a sixth consecutive month, according to London-based digital assets data provider CCData. Trading volume in futures and options tied to cryptocurrencies on centralized exchanges rose 86.5% to a record $6.18 trillion, some three times the total market capitalization of all cryptocurrencies. Still, derivatives trading's share of the crypto market slipped to 67.8%, the lowest since December 2022, as traders flocked to the spot market, where cryptocurrencies are exchanged for immediate delivery.

In March, crypto derivatives trading volume on centralized exchanges surged to $6.18 trillion. (CCData)

Ethena Labs will start purchasing and shorting bitcoin (BTC) as part of a cash-and-carry trade in a move that developers say will create a safer USDe synthetic dollar for users. The controversial platform is generating an annualized yield of 37% – a seven-day rolling average that can change – by shorting ether (ETH) futures and pocketing funding rates since its January rollout. Funding rates are periodic payments to traders that are long or short based on the difference between perpetual contract markets and spot prices. While such a strategy has attracted detractors, demand has continued to grow with more than $2 billion in USDe being issued since its release. USDe is supposed to maintain a $1 peg at all times, mimicking a stablecoin but with a different backing mechanism.

Technical analysis is flashing several warning signals to alternative cryptocurrency (altcoin) bulls, with the ether-bitcoin (ETH/BTC) ratio dropping below a support level and on the verge of falling into an ominous death-cross technical pattern. The options market shows investors are taking the hint. A death cross occurs when a short-term moving average drops below the long-term moving average, signaling a potential long-term bearish shift in momentum. The ratio's 50-week simple moving average (SMA) appears on track to cross below the 200-week SMA, according to charting platform TradingView. The impending death cross signals risk aversion or prolonged underperformance of ether (ETH) and other altcoins relative to bitcoin (BTC).

Between tokens that replicate complex financial instruments like rehypothecation to many a-dog-with-a-hat-type meme projects, there are a lot of tokens in the crypto ecosystem. Too many, according to some experts, who are predicting a wave of consolidation in the coming weeks and months.

With more than 13,000 tokens and about $2.5 trillion in market cap, the question becomes - why are there so many tokens when the utilization and adoption of the technology are not even close to where they should be?

Enter mergers and acquisitions (M&A) which could help clean up sectors such as decentralized finance (DeFi) and NFT projects and even meme coins, according to industry observers.

- Omkar Godbole