Review and Outlook of the Crypto Assets Derivation Market in the First Half of 2025

In the first half of 2025, the global macro environment continues to be turbulent. The Federal Reserve has repeatedly paused interest rate cuts, reflecting that its monetary policy has entered a "wait-and-see tug-of-war" phase, while the Trump administration's increased tariffs and escalating geopolitical conflicts further tear apart the global risk appetite structure. Meanwhile, the crypto assets derivation market has maintained the strong momentum from the end of 2024, with the overall scale reaching new highs. After BTC broke through its historical high of $111K at the beginning of the year and entered a consolidation phase, global BTC derivation open interest (OI) has surged significantly, with the overall open interest rising from about $60 billion to over $70 billion at its peak from January to June. As of June, although the price of BTC has remained relatively stable around $100K, the derivation market has experienced multiple rounds of long and short liquidations, with leveraged risks being released, resulting in a relatively healthy market structure.

It is expected that in Q3 and Q4, the derivation market will continue to expand, volatility may remain convergent, while risk indicators need to be continuously monitored, maintaining a cautiously optimistic attitude towards the continued rise in BTC prices.

1. Market Overview

Market Overview

In the first and second quarters of 2025, the price of BTC experienced significant fluctuations. At the beginning of the year, the price of BTC reached a high of $110K in January, then fell to about $75K in April, a drop of about 30%. However, with the improvement in market sentiment and continued interest from institutional investors, the price of BTC climbed again in May, reaching a peak of $112K. As of June, the price stabilized around $107K. Meanwhile, BTC's market share continued to strengthen in the first half of 2025. According to data, BTC's market share reached 60% at the end of the first quarter, the highest level since 2021. This trend continued into the second quarter, with market share exceeding 65%, showing investors' preference for BTC.

At the same time, institutional investors' interest in BTC continues to grow, with a sustained inflow trend for the BTC spot ETF, whose total assets under management have exceeded 130 billion USD. Additionally, certain global macroeconomic factors, such as the decline in the US dollar index and distrust in the traditional financial system, have also driven the attractiveness of BTC as a store of value.

In the first half of 2025, the overall performance of ETH was disappointing. Although the price of ETH briefly reached a high of around $3,700 at the beginning of the year, it quickly fell back significantly. By April, ETH had dropped below $1,400 at its lowest, a decline of over 60%. The price recovery in May was limited, and even with the release of favorable technical developments (such as the Pectra upgrade), ETH only rebounded to around $2,700, failing to reclaim the early-year high. As of June 1, the price of ETH stabilized around $2,500, down nearly 30% from the early-year high, and did not show strong signs of a sustained recovery.

The divergence between ETH and BTC is particularly evident. Against the backdrop of BTC's rebound and the continuous rise of its market dominance, ETH not only failed to rise in tandem but instead exhibited significant weakness. This phenomenon is reflected in the notable decline of the ETH/BTC ratio, which dropped from 0.036 at the beginning of the year to a low of about 0.017, a decrease of over 50%. This divergence reveals a significant decline in market confidence in ETH. It is expected that in the third to fourth quarter of 2025, with the approval of the ETH spot ETF staking mechanism, market risk appetite may rebound, and overall sentiment is likely to improve.

The overall performance of the altcoin market is notably weak. Data shows that some mainstream altcoins, represented by Solana, experienced a brief surge at the beginning of the year but subsequently underwent continuous corrections. SOL fell from a high of about $295 to a low of approximately $113 in April, a decline of over 60%. Most other altcoins (such as Avalanche, Polkadot, ADA) also generally saw similar or even larger declines, with some altcoins dropping more than 90% from their peak. This phenomenon indicates an increased risk aversion sentiment in the market towards high-risk assets.

In the current market environment, BTC's position as a risk-averse asset has been significantly strengthened, with its attributes shifting from "speculative asset" to "institutional allocation asset/macroeconomic asset". Meanwhile, ETH and altcoins remain focused on "crypto native capital, retail speculation, and DeFi activities", positioning them more similarly to technology stocks. The ETH and altcoin markets have shown continued weakness due to reduced funding preferences, increased competitive pressure, and the impact of macroeconomic and regulatory environments. Aside from a few public chains (like Solana) continuously expanding their ecosystems, the overall altcoin market lacks significant technological innovation or new large-scale application scenarios to effectively attract sustained investor attention. In the short term, due to liquidity constraints at the macro level, unless there are new strong ecological or technological drivers in the ETH and altcoin markets, it will be challenging to significantly reverse the weak trend, and investor sentiment towards altcoin investments remains cautious and conservative.

BTC/ETH derivation position and leverage trend

The total open interest of BTC reached a new high in the first half of 2025, driven by massive capital inflows into the spot ETF and strong demand for futures, with BTC futures OI further climbing and briefly surpassing 70 billion USD in May this year.

It is worth noting that the share of traditional regulated exchanges such as CME has rapidly increased. As of June 1, data shows that CME's BTC futures open interest reached 158,300 BTC (approximately $16.5 billion), ranking first among exchanges, surpassing a certain trading platform's 118,700 BTC (approximately $12.3 billion) during the same period. This reflects that institutions are entering through regulated channels, with CME and ETFs becoming important increments. A certain trading platform still has the largest open interest in the Crypto Assets exchange, but its market share has been diluted.

In terms of ETH, similar to BTC, its total open contracts reached a new high in the first half of 2025, surpassing 30 billion US dollars in May this year. As of June 1, data shows that the open ETH futures on a certain trading platform reached 2.354 million ETH (approximately 6 billion US dollars), ranking first among all exchanges.

Overall, the leverage usage of exchange users in the first half of the year has tended to be rational. Although the total market's open interest has risen, multiple violent fluctuations have cleared excessive leveraged positions, and the average leverage ratio of exchange users has not spiraled out of control. Especially after the market fluctuations in February and April, the margin reserves of exchanges are relatively ample. Although the leverage ratio indicators of the entire market have occasionally reached peaks, they have not shown a sustained upward trend.

CoinGlass derivation index ( CGDI ) analysis

The CoinGlass Derivatives Index, hereinafter referred to as "CGDI", is an index that measures the price performance of the global crypto derivatives market. Currently, over 80% of the trading volume in the crypto market comes from derivation contracts, while mainstream spot indices do not effectively reflect the core pricing mechanism of the market. CGDI dynamically tracks the prices of the top 100 mainstream crypto assets perpetual contracts by open interest ranking, and combines their open interest quantities for value weighting, constructing a highly representative derivatives market trend indicator in real-time.

The CGDI showed a divergence from the BTC price in the first half of the year. At the beginning of the year, BTC surged strongly driven by institutional buying, maintaining prices near historical highs, but CGDI began to decline from February---the reason for this drop is the weak prices of other mainstream contract assets. Since CGDI is calculated based on the OI weighted by mainstream contract assets, while BTC stood out, ETH and altcoin futures failed to strengthen simultaneously, dragging down the composite index performance. In short, in the first half of the year, funds clearly concentrated on BTC, which remained strong mainly supported by institutional long-term accumulation and the spot ETF effect, leading to an increase in BTC's market share, while the cooling of speculative enthusiasm in the altcoin sector and capital outflow caused CGDI to decline, even as BTC prices remained high. This divergence reflects a change in investor risk appetite: positive ETF news and safe-haven demand drove funds into high market cap assets like BTC, while regulatory uncertainty and profit-taking pressured secondary assets and the altcoin market.

CoinGlass derivation risk index ( CDRI ) analysis

CoinGlass Derivatives Risk Index (CDRI) is an indicator used to measure the risk intensity of the Crypto Assets derivatives market. It quantifies and reflects the current level of leverage usage, trading sentiment, and systemic liquidation risk. CDRI focuses on forward-looking risk warnings, issuing alerts in advance when market structure deteriorates, showing a high-risk status even if prices are still rising. The index constructs a real-time risk profile of the Crypto Assets derivatives market through weighted analysis across multiple dimensions, including open interest, funding rates, leverage multiples, long-short ratios, contract volatility, and liquidation volumes. CDRI is a standardized risk scoring model ranging from 0 to 100, with higher values indicating that the market is closer to overheating or a fragile state, making it more prone to systemic liquidation events.

The CoinGlass Derivation Risk Index (CDRI) has generally remained at a slightly high neutral level in the first half of the year. As of June 1st, the CDRI stands at 58, within the "moderate risk/volatility neutral" range, indicating that the market is not showing obvious signs of overheating or panic, and short-term risks are manageable.

2. Crypto Assets Derivation Data Analysis

perpetual contract funding fee rate analysis

The changes in the funding rate directly reflect the usage of leverage in the market. A positive funding rate usually indicates an increase in long positions, with bullish market sentiment; while a negative funding rate may suggest rising short pressure, leading to a more cautious market sentiment. The fluctuations in the funding rate alert investors to pay attention to leverage risks, especially during rapid changes in market sentiment.

In the first half of 2025, the overall market for Crypto Assets perpetual contracts showed a dominant bullish trend, with the funding rate being positive for most of the time. The funding rates for major Crypto Assets remained positive and above the benchmark level of 0.01%, indicating a generally bullish market sentiment. During this period, investors held an optimistic view of the market outlook, which drove an increase in long positions. As long positions became crowded and profit-taking pressure increased, BTC experienced a rise and fall in mid to late January, and the funding rate returned to normal.

As we enter the second quarter, market sentiment returns to rationality, with funding rates mostly remaining below 0.01% (annualized about 11%) from April to June, and in some periods even turning negative, indicating that the speculative frenzy has subsided and long and short positions are tending to balance. According to the data, the number of times the funding rate turned from positive to negative is very limited, indicating that there are not many points in time when bearish sentiment in the market concentratedly erupted. In early February, Trump