Perpetual futures on exchange-traded funds (ETFs) have exploded in popularity in the past four months, growing by more than 200% for three months in a row through July, before settling down in August, alongside a broader late-summer cooling in perpetual futures (perps) volumes. 

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The mix of underlying ETFs among the most-traded contracts reveals a quest for maximum leverage on hot trades like AI and South Korean stocks. Binance, for example, offers 20X leverage on its Direxion Daily Semiconductor Bull 3X Shares (SOXL) ETF perp. 

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The following charts and tables illustrate where that quest is taking traders on these markets, and how the underlying ETFs have performed during that time.

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ETF Perps’ Top Use Case: Leverage Multiplier

Six of the top 10 ETF perps by volume cover leveraged ETFs, revealing perps traders’ appetite for risk. Of those, only one, the Direxion Daily Semiconductor Bear 3X Shares (SOXS) ETF, is a short fund. Out of the five leveraged-long ETFs, three cover single stocks. 

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Looking at the spot-price performance of the underlying ETFs, half are in positive territory since the date of their listing on Binance (the largest market by aggregate volume to date on all these perps). However, the ETFs underlying the two most-traded contracts, on SOXL and Direxion Daily South Korea Bull 3X Shares (KORU) ETF, are both negative since listing on Binance. Overall, these two represent just over 60% of the total volume in the top 20 ETF perps to date.

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Volume Surges Timed With Troughs & Rallies

Looking at SOXL, KORU, and the rest of the top-traded ETF perps, all but one, the Tradr 2X Long SNDK Daily (SNXX) ETF, hit their weekly volume peaks in the week beginning July 27. That coincided with local price bottoms for many of the underlying assets, as the AI trade stumbled and South Korea’s white-hot market suffered a meltdown. 

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Conversely, volumes spiked again on the week of Aug 17, as some of the underlying ETFs staged rallies.

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The Top 20 ETF Perps by Volume

A more comprehensive list of the top ETF perps shows just how wide the gap is between leverage-multipliers like SOXL and KORU, and perpetual futures covering more staid products like the Invesco QQQ Trust ETF, tracking the Nasdaq-100, and the iShares MSCI South Korea (EWY) ETF. 

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Further down, the long tail is a mix of ETFs on gold and silver on EdgeX, first listed relatively early, in January, and more wildly exotic perps like Bitget’s listing on the CSOP SK Hynix Daily Max (2x) Leveraged Product, a Hong Kong-traded fund that tracks South Korean memory-chip maker SK Hynix.

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Conclusion

ETF perps are the fastest-growing sliver of the emergent RWA perpetual futures markets. The data here are intended to show a snapshot of their early growth, revealing the kinds of trades that are driving volume here. 

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