Why Crypto Trading Volumes Soared to $800 Billion
Highly centralized cryptocurrency exchanges, including Binance and Coinbase, saw significant growth in spot trading activity in January.
Industry experts have suggested that the growth may be linked to higher expectations of spot bitcoin ETFs (exchange-traded funds).
Crypto trading volumes are increasing
Analysts at blockchain analytics firm CryptoRank forecast a 10.4% increase in trading volume from December 2023 to more than $800 billion in January. Interestingly, Binance has raised $400 billion, seemingly to recover from regulatory challenges in various jurisdictions, including the US.
Despite increasing regulatory oversight, Binance remains the dominant trading platform, commanding an impressive 52% of the market.
Read More: 14 Best No KYC Crypto Exchanges in 2024
Coinbase, the largest US-based crypto trading platform, also saw a 20% increase in trading volume, which may be due to the important role of the newly launched Bitcoin ETFs.
Similarly, platforms such as Appbit, Crypto.com and Huobi saw the highest growth, increasing by 44.6%, 28.4% and 23.8% respectively. Bybit, Kraken and OKX also showed positive growth of 15.0%, 12.1% and 5.9% respectively, with KuCoin having the lowest growth rate at 3.3%.
In contrast, Gate.io was the only major CEX to report a 34% drop in spot transaction volume.
Why is transaction volume increasing?
The higher trading activity seen last month extends the positive trend observed since October 2023. Observers mainly attribute the improved numbers to the high demand around Bitcoin ETFs.
Renowned crypto analyst Al Burt emphasized the strong trading activity in January. This increase is attributed to increased user participation and growth in SEC's ETF approvals. Albert Burt highlighted that overall improvement in macroeconomic conditions is an important factor influencing the improved market size.
“Overall macro conditions are improving, the Fed is likely to cut rates in the first half of 2024. China has already announced an improvement, and the ECB will soon start cutting rates after strong economies in the bloc, Germany. It has experienced higher-than-expected inflation,” Al Burt said. He explained.
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