A representation of bitcoin is seen in front of a stock graph in this illustration

Trading volumes in bitcoin futures and exchange traded funds (ETFs) has exploded as investors scrambled to hedge their positions after this week's slump in digital tokens triggered by turmoil at crypto exchange FTX.

CME bitcoin futures November contracts traded at $17,250, with a volume of 13,292 at 11:24 a.m. EST (1624 GMT), which was a 3% discount to the spot price of $17,770.

Trading volumes soared on Tuesday and Wednesday as FTX's woes worsened, touching 48,554 and 32,168 contracts respectively, significantly higher than volumes over the past two months which hovered between 4,902 and 27,309.

Bitcoin bounced 10% on Thursday after touching a late-2020 low earlier in the day as largest crypto exchange Binance walked away from a bailout of FTX, leaving the firm's urgent push to plug a reported $8 billion hole in its finances.

The ProShares short bitcoin strategy ETF, a bearish play on CME bitcoin futures, witnessed record trading volume on Wednesday as investors hunted for "regulated, transparent futures market," ProShares Global Investment Strategist Simeon Hyman said.

"This suggests an overwhelmingly strong unison desire to hedge, with shorts being the predominant force of leveraged exposure at the moment," said Vetle Lunde, analyst at Norway-based crypto research firm Arcane Research.

Meanwhile, ProShares Bitcoin Strategy ETF, which was halted for trading on Wednesday, has witnessed a 300% jump in trading volume in the from its previous high on October 21, 2022.

Assets under management for the BITO fund has shrunk by almost a third since its launch nearly a year ago to about $500 million, according to Refinitiv Lipper data.

Funding rates that represent sentiment in the perpetual swaps market, a major part of the bitcoin derivatives world, were negative 0.0219% on Thursday, according to Coinglass, trading near levels last seen in March 2020, Arcane Research's Lunde said.

Negative funding rates imply sentiment is bearish as investors must pay to hold a short position.

Some market participants reported facing issues with borrowing and shorting cryptocurrencies.

"We've traded some spot in the last few days and trading desks are being very conservative with risk management right now so it wouldn't surprise me that futures markets are getting a bit tricky to navigate," said Greg King, chief executive officer at Osprey Funds.