User Participation in Cryptocurrency Derivative Markets

Authors Daisuke Kawai , Bryan Routledge , Kyle Soska , Ariel Zetlin-Jones , Nicolas Christin

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Author Details

Daisuke Kawai
  • Carnegie Mellon University, Pittsburgh, PA, USA
Bryan Routledge
  • Carnegie Mellon University, Pittsburgh, PA, USA
Kyle Soska
  • Ramiel Capital, New York, NY, USA
Ariel Zetlin-Jones
  • Carnegie Mellon University, Pittsburgh, PA, USA
Nicolas Christin
  • Carnegie Mellon University, Pittsburgh, PA, USA

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Daisuke Kawai, Bryan Routledge, Kyle Soska, Ariel Zetlin-Jones, and Nicolas Christin. User Participation in Cryptocurrency Derivative Markets. In 5th Conference on Advances in Financial Technologies (AFT 2023). Leibniz International Proceedings in Informatics (LIPIcs), Volume 282, pp. 8:1-8:24, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2023)


As cryptocurrencies have been appreciating against fiat currencies, global markets for cryptocurrency investment have started to emerge, including, most prominently, derivative exchanges. Different from traditional derivative markets, cryptocurrency derivative products are directly marketed to consumers, rather than through brokerage firms or institutional investors. Cryptocurrency derivative exchange platforms include many game-like features (e.g., leaderboards, chatrooms, loot boxes), and have successfully attracted large numbers of investors. This paper attempts to discover the primary factors driving users to flock to these platforms. To answer this question, we have collected approximately a year worth of user data from one of the leading cryptocurrency derivative exchanges between 2020 and 2021. During that period, more than 7.5 million new user accounts were created on that platform. We build a regression analysis, accounting for the idiosyncrasies of the data at hand - notably, its non-stationarity and high correlation - and discover that prices of two major cryptocurrencies, Bitcoin and Ethereum, impact user registrations both in the short and long run. On the other hand, the influence of a less prominent coin, Ripple, and of a "meme" coin with a large social media presence, Dogecoin, is much more subtle. In particular, our regression model reveals the influence of Ripple prices vanishes when we include the SEC litigation against Ripple Labs, Inc. as an explanatory factor. Our regression analysis also suggests that the Chinese government statement regarding tightening cryptocurrency mining and trading regulations adversely impacted user registrations. These results indicate the strong influence of regulatory authorities on cryptocurrency investor behavior. We find cryptocurrency volatility impacts user registrations differently depending on the currency considered: volatility episodes in major cryptocurrencies immediately affect user registrations, whereas volatility of less prominent coins shows a delayed influence.

Subject Classification

ACM Subject Classification
  • General and reference → Measurement
  • Applied computing → Digital cash
  • Cryptocurrency
  • Online Markets
  • Derivatives
  • Trading
  • Regression Analysis


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