Bitcoin ETF Fever Boosts Crypto Spot Volumes by 60% YoY

The crypto spot trading volumes for the top 10 exchanges in December 2023 reached their highest levels since June 2022, marking the third consecutive month of growth.

Binance, maintaining its lead, experienced a 40% month-on-month (MoM) increase in trading volumes, amounting to $432.65 billion. According to Finance Magnates Intelligence, there was a 32% increase in total trading volume, climbing from $671 billion to $887 billion. Notably, this period also witnessed a year-over-year (YoY) increase of 64%, attributed to the weak industry condition in December 2022.

After two consecutive months of growth, expectations were high for December. Bitcoin (BTC) did not disappoint investors, adding 12% to its value in the past month and testing new annual highs. This surge in Bitcoin’s value significantly boosted investor activity, increasing cryptocurrency exchange volumes considerably.

Binance retained its top position with trading volumes of $433 billion and a 46% market share. Upbit remained in second place with $92 billion, and OKX held the third spot with $87 billion in trading volumes. ByBit also reached the top ranks, securing the fourth position with $82 billion in volumes.

In the case of these two exchanges, a very strong MoM and YoY volume surge was recorded, which amounted to over 40% compared to the previous month and 126% and 209%, respectively, compared to December 2023. However, the record holder in this regard turned out to be Upbit, whose YoY volumes grew almost tenfold, by 952%.

“Over the past year, we’ve seen a significant recovery in the markets, and expectations around the likely approval of the Bitcoin Spot ETF certainly played into that, particularly in December and early January, when at VALR we recorded our highest daily trading volume to date,” commented Ben Caselin, the CMO of VALR.

Anticipation of Bitcoin Spot ETF Drives Trading Volumes

Bitcoin’s price increases and the subsequent rise in trading volumes continued for another month, driven by eager anticipation of the first-ever Bitcoin spot exchange-traded funds (ETFs). Although these ETFs were eventually introduced in 2024, the Bitcoin market saw dynamic growth in anticipation of their launch, especially noticeable in December.

It appears that the upward momentum will continue into this month. Preliminary data for January 2024 indicated that spot volumes for exchanges reported by Finance Magnates have already reached $500 billion halfway through the month, following over $714 billion in January 2023.

However, the future remains uncertain. Following the introduction of nearly a dozen new cryptocurrency ETFs, the market began to exhibit a “sell the news” scenario, and the new instruments attracted less capital than expected in their initial days of trading. Finance Magnates’ infographic shows that four issuers, namely Bitwise, ARK Invest, Invesco, and WisdomTree, have decided to cut fees to zero for six months, followed by a rate of 0.2 to 0.3%, to attract more capital.

The situation for Bitcoin might be saved by the upcoming network halving, which is expected to occur in April, which could potentially impact its trajectory.

“It’s also good to take stock of the overall and persistent cyclical nature of growth in the crypto space, with the Bitcoin halving marking a new cycle roughly every four years and which is happening again in just under 100 days from now. From that perspective, both Bitcoin’s recovery and the recent spikes in volatility are not too much out of the ordinary,” Caselin concluded.