Top centralized crypto exchanges such as Binance and Coinbase saw a notable increase in spot trading activity in January.
Industry experts suggested that this upward trend could be related to rising expectations for spot Bitcoin exchange-traded funds (ETFs).
Cryptocurrency trading volume rapidly increases
Analyst at blockchain analysis company CryptoRank observed Trading volume on centralized exchanges has increased 10.4% since December 2023, reaching a 12-month high of more than $800 billion in January. Interestingly, Binance accounts for $400 billion as it recovers from the regulatory challenges it faced in several jurisdictions, including the US.
Despite increased regulatory scrutiny, Binance remains the dominant trading platform, with a whopping 52% share of the market.
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Coinbase, the largest US-based cryptocurrency trading platform, also saw a 20% jump in trading volume, which can be attributed to its key role in the newly launched Spot Bitcoin ETF.
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 recorded positive growth of 15.0%, 12.1%, and 5.9%, respectively, but KuCoin had the lowest growth rate of his at 3.3%.
In contrast, Gate.io was the only major CEX to report a 34% drop in spot trading volume.
Why is trading volume increasing?
The increase in trading activity observed in the past month is an extension of the positive trend that has been noted since October 2023. Observers are primarily linking the improved numbers to increased interest around Bitcoin ETFs.
Renowned cryptocurrency analyst Al Burt highlighted that there was strong trading activity throughout January. He attributed this surge to increased user engagement and growth fueled by the SEC’s ETF approval. Mr. Al Bart also highlighted the overall improvement in macroeconomic conditions as a key factor influencing market volume expansion.
“The general macro situation is improving, and the Fed is likely to cut rates in the first half of 2024. China has already announced easing, and the ECB has been influenced by Germany, the strongest economy in the region. “Experienced a larger-than-expected decline in inflation,” said Al Burt. explained.