2021 was a wild year for the crypto market - and by the looks of things, we’re in for another rollercoaster in 2022. At B2C2, we see three main trends on the horizon:
Structured products will become part of every investor's portfolio
If 2021 was about the hunt for additional yield in a booming market, 2022 will be about achieving this yield in all types of market. As well as DOVs described below, we see the emergence of Dual Currency Loans, tradable on-chain debt products and baskets of investible products with an assortment of payoffs. In both the equities and fixed income markets, structured products were a sign that the market had matured to a stage where it could offer investors exactly the kind of exposure they required. We see a similar trend in the near future for cryptocurrency - and we welcome it.
Trading volumes will move away from centralised exchanges
We believe that OTC platforms and DeFi protocols will be the real winners here. Globally, we see exchanges with a strong consumer presence continue to lose ground to OTC apps that offer a seamless experience at spreads as tight or tighter than the most liquid exchanges. Institutional flow will follow a similar pattern as retail: we expect the traditional money flowing into our market to transact on OTC platforms in the manner seen in the FX market. We don’t believe the FX market has evolved by chance. Those on the cutting edge of crypto will trade in permissionless venues such as DEXs or DOVs - and we can see walled DeFi platforms such as Aave Arc enabling even more of the market to move into DeFi in 2022.
Options trading will rise to equal importance as spot
While the crypto options market has existed in some form for a number of years now, 2021 saw options volume grow from solely on exchange to being traded OTC too. In traditional finance, options volume is on par (or larger) than spot volume, in some markets. The birth of DeFi Options Vaults (DOVs) as a source of natural yield for investors is a hint at where the crypto market is moving. At B2C2 we see options liquidity expanding from just ETH and BTC to altcoins such as DOT, SOL, AVAX and more. As investors begin to express their view via the options market instead of in spot, vol surfaces and gamma hedging become leading indicators. In 2022 this will mean options flow has significance for all market participants.
The future of any market is difficult to predict, and the cryptocurrency market will undoubtedly contain many surprises. What we do know is that both capital and talent are streaming out of traditional finance and into the cryptocurrency world. That alone fills us with excitement for what 2022 has in store.
More than just a liquidity provider, B2C2 is a digital asset pioneer building the ecosystem of the future.
The firm has unlocked institutional access to crypto by providing reliable liquidity across market conditions. B2C2’s success is built on crypto native technology and continuous product innovation, making it the partner of choice for diverse institutions globally.
Founded in 2015 and majority owned by Japanese financial group, SBI, B2C2 Ltd is headquartered in the UK, with offices in the US and Japan.
B2C2 Ltd is registered in England and Wales under company number 07995888 with its registered office at 86-90 Paul Street, London, EC2A 4NE. B2C2 Ltd is the parent company of the B2C2 group of companies. Products may be provided by different members of the B2C2 group of companies, depending on the jurisdiction of the client and the regulatory status of the product and/or B2C2 group member. B2C2 is a registered trademark.
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