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Even if much of the discourse about Aptos this week has ranged from snide remarks to outright condemnation, the newest cryptocurrency on the market is gaining a lot of attention, generating considerable volume in its first few days of trading.
As of Friday afternoon, APT, the native coin of the Aptos blockchain, has done at least $1.3 billion in volume since Wednesday, its first full day of trading, according to CoinGecko. It’s an interesting counterpoint to all of the derision that the project took on Crypto Twitter, which is the closest thing the industry has to a town square.
The much-hyped blockchain unveiled its mainnet on Monday. Over the next 24 hours the project took a lot of criticism for the lack of transparency around its tokenomics—that is to say, the specifics of the cryptocurrency’s economic model and distribution.
Crypto podcaster Cobie took aim at exchanges planning to list the APT token before the tokenomics had been made public.
lmao sigh ………. pic.twitter.com/l7KKWwy4pu
— Cobie (@cobie) October 18, 2022
Then, when the details of its token distribution leaked, the team confirmed them in a blog post and took a new round of criticism.
That’s because 51% of the APT supply is sitting with venture capital firms. For some traders, like an investor who goes by "iamDCinvestor" on Twitter, that’s an indication that the entire project is “a fairly blatant cash grab.”
the near categorical rejection of Aptos,
created by ex-Libra devs as a fairly blatant cash grab (and ofc funded by the usual suspects who extract billions from the space),
may be one of the most important social shifts we’ve seen in the space in a while
— DCinvestor.eth ⌐◨-◨ (@iamDCinvestor) October 19, 2022
On Tuesday afternoon, Aptos co-founder and CEO Mo Shaikh took to Twitter to address concerns and acknowledge that the launch “could have gone better.” This all happened right before the token began trading that evening. Then, in its first few hours, APT plummeted by 40%.
Its price hasn’t improved much since then. As of Friday afternoon, it’s trading at $7.38—down 46% from its first trade, according to CoinGecko. Still, the token has a market capitalization of $963 million. That puts it ahead of KuCoin, TrueUSD, Pax Dollar, and Maker’s native token MKR.
All the attention, even if the bulk of it has been negative, means there’s been lots of APT changing hands on crypto exchanges.
Binance has accounted for more than half of all the daily APT spot trading every day since the token launched on Tuesday night. As of this writing, the world's largest cryptocurrency exchange has seen $193 million, or 57%, worth of trades across its five APT trading pairs in the last 24 hours.
Huobi Global, which normally falls just outside the top 10 crypto exchanges by volume, has seen an outsized portion of APT trades. It accounted for 11% of all spot volume and saw $39 million worth of APT traded across its three pairs (Tether, USD Coin and Tron’s USDD stablecoin) since yesterday.
That means the APT-USDT pair has done more volume on Huobi than the USDC-, Solana- and Huobi Token-USDT pairs.
Meanwhile, the perpetual contracts that the Aptos team was rumored to have been asking exchanges not to launch so soon, have seen a lot of action.
Exclusive: Aptos asked major exchanges not to list perpetual contracts within 2 weeks, but Binance announced that APTUSDT perpetual contracts will be listed on October 19th. Aptos is urgently persuading Binance to stop. https://t.co/4ADxe1xSS8
— Wu Blockchain (@WuBlockchain) October 18, 2022
A crypto newsletter author, who goes by "alpha_pls" on Twitter, was one of many to urge traders to “send Aptos to zero.”
The way that traders can do that, or at least bet against an asset, is by opening short derivative positions.
Futures contracts are a type of derivative that allows investors to bet on price movements of an underlying asset. To be short on an asset means an investor thinks the price will go down; being long on an asset means an investor is betting its price will go up.
9 minutes to make $3000
I love crypto pic.twitter.com/oIfZkj7kvD
— Cozy ⓣhe Caller 🚀 (@cozypront) October 19, 2022
A standard futures contract expires over the course of a couple weeks, months or even years. But a perpetual contract remains open—meaning that the trader remains exposed to the risk that they’ll be liquidated if the market swings too far in one direction.
The open interest, or open derivatives contracts for APT, peaked at 11 a.m. on Wednesday, October 19 at $153 million, according to Coinalyze. That's around the time APT had rebounded slightly from its low of $6.75. Since then open interest has held pretty steady at around $130 million.
Coinalyze aggregates the value of open APT futures positions across Binance, FTX, OKX, Huobi, Bybit, and Bitmex. That doesn’t capture all of the exchanges offering perpetual contracts for Aptos, but they are the largest.
In the last 24 hours, there’s been $2.5 million worth of liquidations on APT futures contracts—a sign of just how volatile the price has been and, perhaps, how overzealous traders have been in placing bets on its fate.
That makes Aptos contracts the fifth highest for liquidations in the past day, behind Bitcoin, Ethereum, Ripple’s XRP, and Solana, according to Coinalyze.
Most exchanges will automatically liquidate, or sell a trader’s assets for cash, if they can’t meet the margin on their futures position. The risk of liquidation increases if the underlying asset is especially volatile, a trader has high leverage on their position, or both.
When a trade is leveraged, that means the trader has placed a bet with money they don’t have in their account and have essentially borrowed from the exchange. For example, Binance allows traders to open perpetual APT contracts with 25x leverage. That means someone could open a contract worth $2,500 with only $100.
But if APT price went up when a trader bet it would go down, they could be forced to add more margin to that $100 or risk being liquidated. Liquidation means a trader loses all their cash and usually needs to pay a liquidation fee to the exchange.
Aptos – a very heavily shorted launch.
Leverage is extremely high (9% of circ supply already), while funding rates are extremely negative.
Cumulative funding rate on FTX since launch: -0.94%. Very expensive short! pic.twitter.com/JGsAHu6ylN
— Vetle Lunde (@VetleLunde) October 19, 2022
Early on Wednesday morning, leverage on Aptos perpetual contracts accounted for 9% of APT’s circulating supply, according to Arcane Research analyst Vetle Lunde. But the funding rates were extremely negative, he pointed out on Twitter, meaning traders shorting APT would have had to spend a lot of money to maintain their positions.
But the Aptos funding rates on Binance and FTX have gotten close to or recently become positive. That means traders who managed to hang onto their short positions could soon drive the token’s price even lower.
Disclaimer
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.
