Crypto Market Maker Cumberland Explains Why Crypto Is ‘Far From’ Dead

On Tuesday (October 18), crypto trading firm Cumberland DRW LLC, which is a subsidiary of privately held trading firm DRAW Holdings, explained why — despite what some people may think — the crypto market is far from dead.

Cumberland said:

“Much has been made of the recent muted price action, with an embedded conclusion that lower volatility represents a lack of interest in the digital asset space.

“This analysis is deeply problematic, however, because it obfuscates the critical difference between trading volumes and price volatility. Volatility is indeed muted, but volumes, while certainly off the highs of the year, remain absolutely massive: $50B worth of linear bitcoin derivatives clear on exchanges each day, and this figure excludes spot, on-chain activity, and any non-BTC-related trading. Total economic activity in crypto is probably north of $100B/day, which is roughly 1/5th the figure for US equities.

“Recent volatility-driven concerns about the health of the crypto space likely stem from comparisons to the bear market of 2018, when volumes were dire. This time is different: an enormous amount of value is clearing at this price set, indicating equilibrium for a large & growing marketplace, not the price pattern of a stranded asset in its death throes.“

As CryptoCompare pointed out in the September 2022 edition of its “Exchange Review” report, spot trading volume across the best (i.e. “Top Tier”) crypto exchanges went up 13.8% in September compared to August:

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