The cryptocurrency industry looks a lot different than it appeared just three years ago. The year 2017 was like the Wild West. It featured astronomical price increases and a slew of huge fundraising events that took place under minimal regulation. Some aspects of 2017, such as the many initial coin offerings, have waned. Other parts of it, such as the trading of derivatives, have seen incredible growth according to the American cryptocurrency exchange Kraken.

Starting with pioneers in the cryptocurrency facilities, the derivatives trading in the markets took hold in 2017. Some of them included OKCoin, now called OKEx, BitMex and Deribit. In a November report called "The Tail Wags the Dog: An Evolution of Bitcoin Futures," an analyst found that there are now 4.6 times more trades in derivatives than just a few years ago. The analyst expects the trend to continue because it allows the coins to be transferred at the going rate off of the market exchanges. The derivatives act like a bet on the future value of Bitcoin.

The demand for derivatives of cryptocurrencies has also grown. BitMex made a bigger platform. New options, such as Bybit came into being. Binance set up its own derivative market. The Chicago Mercantile Exchange put in a new option for Bitcoin futures in 2017. In 2020, it added options for Bitcoin trading. Chicago Board Options Exchange allowed the trading of Bitcoin futures in 2017, but it took it off the market in 2019.

The report said that the volume of derivatives is staggering. Spot trading has declined a little. Derivatives took over those declines. Spot volume's biggest declines occurred around 2018. Derivative volumes saw their biggest gains in the past year. When it comes to growth, leverage plays the biggest role. A trader of derivatives can basically borrow a huge amount of capital to do a trade. They can base it on the amount of holdings in their account.

Even though derivatives have blossomed since 2017, regulators are catching up. Most of the cryptocurrency platforms have banned American customers in the past few years. American authorities went after BitMex.