How to explain the annual peak in trading volume?

Industry experts have suggested that this upward trend may be linked to increased interest in spot Bitcoin ETFs (exchange-traded funds).

Skyrocketing cryptocurrency trading volume

Analysts at blockchain analytics company CryptoRank observed that trading volume on centralized exchanges has increased by 10.4% since December 2023 to reach a 12-month high of over $800 billion in January. Interestingly, Binance accounted for $400 billion of this total as the platform looks to recover from the regulatory challenges it faced in several jurisdictions, including the United States.

Despite increasing regulatory scrutiny, Binance remains the dominant exchange in the industry with an impressive 52% market share.

Learn more: The best crypto exchanges without KYC in 2024.

Trading volume for centralized exchanges. Source: CryptoRank

Coinbase, the largest US-based crypto exchange, also saw a 20% increase in trading volume, which can be attributed to its central role in the recently launched spot Bitcoin ETFs.

Similarly, platforms such as Upbit, Crypto.com and Huobi showed the most significant growth, increasing by 44.6%, 28.4% and 23.8% respectively. Bybit, Kraken and OKX also saw positive growth of 15.0%, 12.1% and 5.9% respectively, while KuCoin recorded the lowest growth rate of 3.3%.

In contrast, Gate.io was the only major CEX to see a 34% drop in spot trading volume.

Why is trading volume increasing?

The strong trading activity seen last month continues a positive trend seen since October 2023. Industry observers have primarily linked the improvement in these numbers to increased interest in Bitcoin ETFs.

Noted crypto analyst Al Bert highlighted the robust trading activity throughout January. He attributed the increase to increased user engagement and growth driven by the ETF’s approval by the SEC. Al Bert also highlighted the general improvement in macroeconomic conditions as a critical factor influencing the increase in market volume.

“Overall macroeconomic conditions are improving and the Fed is likely to cut interest rates in the first half of 2024. China has already announced easing and the ECB will hopefully begin cutting interest rates shortly after the bloc’s strongest economy, Germany, experienced a greater fall in inflation than expected,” have explained Sir. Al Bert.

Moral of the story: The more crypto traded, the better.

Disclaimer

Disclaimer: In accordance with The Trust Project guidelines, this price analysis article is intended for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to providing accurate and unbiased information, but market conditions may change without notice. Always do your own research and consult a professional before making any financial decisions.

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