Crypto Derivative Trading Volume Rose for First Time in 4 Months as Market Rallied in July

The use of leverage, not spot market trading, fueled a crypto market rally in July that restored $240 billion in market capitalization. While leverage boosts returns, it exposes traders to forced liquidations by exchanges if the traders can’t meet margin shortages. Therefore, derivatives-led rallies like July’s often inject volatility into the market. That said, overall leverage still remains low compared with early 2021.