On December 10, Bitcoin and Ethereum perpetual futures on the Singapore Exchange (SGX) are steadily accumulating liquidity, with this growth primarily driven by fresh capital inflows rather than funds shifted from other markets. Michael Syn, President of SGX, noted that institutional investors attracted to these futures products are mainly engaging in spot-futures arbitrage rather than pure bullish bets. Moneta Markets FX believes this gradual liquidity buildup helps refine price discovery mechanisms and provides investors with more regulated risk management tools, offering a safer and more stable alternative to the high-leverage auto-liquidation common in unregulated markets.
According to compiled data, SGX's Bitcoin (BTC) and Ethereum (ETH) perpetual futures have seen increasing activity since their launch two weeks ago. On November 24, daily trading volume reached nearly 2,000 contracts, with a notional value of approximately $32 million, while cumulative trading volume has grown to around $250 million. Syn stated that early trading activity primarily comes from institutional hedge funds with futures experience and crypto-native traders, indicating genuine new capital rather than mere reallocation. Moneta Markets FX views this liquidity growth as similar to the introduction of new contracts in forex and interest rate futures markets—creating new markets without disrupting spot or over-the-counter (OTC) trading.
Regarding investment strategies, Moneta Markets FX observes that institutional interest in perpetual futures centers on "cash-and-carry arbitrage," where investors buy spot or related ETFs while shorting perpetual futures to profit from price differentials. Syn emphasized that up to 90% of institutional demand for Bitcoin ETFs actually stems from such arbitrage trades rather than outright long positions. Moneta Markets FX notes that regulated perpetual futures markets enable institutions to execute arbitrage strategies safely and compliantly, avoiding risks associated with offshore markets while providing new pricing benchmarks for Asian trading hours.
On risk management, SGX perpetual futures employ a robust margin system without high-leverage auto-liquidation—a stark contrast to forced liquidations seen on some decentralized exchanges (DEX) during market volatility. Syn highlighted that basis trades (e.g., "$1 spot long = $1 perpetual short") maintain stable positions, a model long validated in treasury and forex basis markets. Moneta Markets FX suggests that as liquidity and trust in BTC and ETH perpetual futures grow, the market could gradually explore launching options or other crypto perpetual contracts, though the current focus remains on steady execution of existing products.
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