Digital asset spot trading volumes continued on a steady rise in January on the back of a spot Bitcoin (BTC) ETF approval by the United States Securities and Exchange Commission (SEC).
A new CCData market report shows an increase in market activity as ETF participants notch inflows and traders ignite following massive institutional investment around digital assets.
Spot trading volumes rose 4.45% to $1.4 trillion in January marking a fourth straight month of gains among centralized exchanges.
The surge in trading volumes driven by ETF approvals has stood at yearly highs with similar figures last seen in 2022. The bear market of 2022 ushered in by industry collapses and macroeconomic factors led to a sharp decline in overall market activity.
As the price of Bitcoin and other assets picked up in 2023 with the anticipation of the Bitcoin ETF approval, spot trading volumes began a steady rise with heightened activity in Q4 2023.
Binance maintained its position as spot trading volumes increased 2.73% to $437 billion. The largest exchange by trading volumes dominated 31.3% of the market share in January ahead of OKX and Coinbase.
OKX’s volumes plummeted 5.2% to $99 billion marking a market share drop to 7.81% while Coinbase spiked to 5.42% of the spot trading market. Coinbase growth can be linked to its listing as a custodian for more BTC ETF applicants alongside other key developments.
Spot Trading On The Rise, Derivatives Trading Declines
While spot trading volumes rose, derivatives trading dropped 2.79% to $3.25 trillion, marking the lowest point since February 2023s.
“Binance continues to dominate the derivatives markets with a market share of 46.3%, however, the exchange, along with the other two largest derivatives exchanges – OKX and Bybit – saw their trading volumes decline, 4.69%, 10.8%, and 6.04% to $1.50tn, $764bn, and $416bn respectively.”
Analysts at CCData suggested that the decline recorded in derivatives trading volumes may be linked to traders leveraging their positions at the end of the spot BTC ETF narrative.
1/2 Chart of the Week: For the first time since November 8 2023, Binance’s #Bitcoin open interest surpassed the CME.
The CME had experienced a notable increase in $BTC open interest, driven by optimism leading up to the approval of the Bitcoin spot ETF. pic.twitter.com/UqLPGseqzd
— CCData (@CCData_io) February 6, 2024
Months leading up to the approval saw a rise in asset prices, leading to digital asset commentators predicting huge institutional inflows into the market and Bitcoin price action above $50,000.
However, days after the approval of Bitcoin ETFs, the market took the opposite turn with the Bitcoin price plummeting almost 9% before making a rebound.
The sell-offs could be seen in both institutional funds and in miner reserves triggering a price fall in the wider markets. Crypto miners moved over $1 billion worth of assets to centralized exchanges 24 hours after the approval.
Some analysts say miners might be leveraging assets ahead of the upcoming halving which will see Bitcoin mining rewards slashed by 50%.
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