Crypto Trading: New Players, Big Risks

Easier Access, Higher Risks

Crypto trading is becoming more accessible than ever.

• $1.27 trillion in trading volume for perpetual futures (perps) in the past 30 days.
• Now available in popular crypto wallets like MetaMask and Phantom, and even on Telegram via the Blum mini-app.

What Are Perps?

• Derivative contracts allowing users to bet on future asset prices, like Bitcoin.
• Leverage can amplify gains but also massive losses.
• Example: On October 10th, $19 billion in liquidations occurred in just hours.

Decentralized Trading Platforms

• Offshore exchanges were once the only option for high-risk trades.
• Decentralized platforms like Hyperliquid now allow anyone with a crypto wallet to trade perps.
• Millions of new users are now exposed to these complex products without centralized exchanges.

Popularity and Revenue

• Phantom: Perps trading makes up 16% of total revenue.
• MetaMask: Perps contribute 6% of revenue.
• Blum: Predicts perps will make up 80% of total volume by early 2026.
• MetaMask's Senior Product Director Mike Lwin calls the early traction "exceptional."

Risks and Education

• Easier access means a broader, less experienced user base.
• Many new users don't fully understand how perps work or the risks involved.
• Gleb Kostarev, co-founder of Blum, highlights the lack of knowledge about auto-deleveraging, a key mechanic in perp trading.

Systemic Risk and Leverage

• Analysts debate whether the popularity of perps could create systemic risk.
• Most risk comes from "whales" holding massive leveraged positions.
• Blum's Kostarev notes that high leverage is aimed at retail users, not whales.
• Blum offers up to 100x leverage, targeting new traders and those from developing countries.

Lower Barriers and Potential Pitfalls

• MetaMask's Lwin sees the lower barrier to entry as a way to unlock a larger audience, deepen liquidity, and accelerate the shift from centralized to decentralized products.
• Messari's Matthew Nay calls it a "double-edged sword."
• While it allows retail traders to access unique crypto products, it could also turn them off if they get burned due to poor education.

Expert Warnings

• Gregoire Magadini, Director of Derivatives at Amberdata, warns that these products are targeting more passive users, which could be a mistake.
• Leveraged positions require active management, profit targets, stop losses, and high-quality data feeds to control risk.
• Easier access to tradable products has been successful in the past, but new traders should plan their trades carefully.