In January, crypto markets reversed their downward trend with Bitcoin and Ethereum rising 39.9% and 32.7% to $23,130 and $1,585, respectively. Market participants have begun to take on more risk as the macroeconomic environment improves with lower inflation and a slowdown of interest rate hikes.
The move upwards came with a significant increase in trading volumes, albeit activity remains heavily suppressed compared to all-time highs.
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Key takeaways:
- Derivative market volumes grew faster than spot markets in January, suggesting that price increases were driven by derivative market speculation rather than spot market accumulation.
- CME’s Bitcoin options trading saw a staggering 278% increase in USD-volumes, reaching $851mn. This is the highest level recorded since we began to collate this data in February 2021.
- January saw a significant increase in trading activity, with spot volumes rising 57.9% to $860bn, while derivative volumes increased 76.1% to $2.04tn. This is the largest percentage increase since January 2021.
- In January, BTC/USDT trading continued to represent the majority of BTC traded into fiat or stablecoin spot markets. Its dominance also rebounded in January, increasing from 55.8% in December to 57.4%.
- Multiple exchanges saw significant USD-denominated growth in trading volume in January. Bybit particularly stood out this month as the only integrated derivative exchange with triple digit month-on-month growth – rising 115% to $301bn in trading volume.
Spot Trading Volumes Saw the Largest % Increase Since January 2021
In January, total spot trading volumes increased 57.9% to $860bn, the highest percentage increase since January 2021. Top-Tier spot volumes increased 58.6% to $800bn, and Lower-Tier spot volumes increased 49.0% to $59.9bn. Despite the favourable increase, trading volumes still persist at historically low levels
Top-Tier exchanges now represent 93.0% of total spot volume based on CryptoCompare’s October 2022 Exchange Benchmark Ranking. This is the highest market share Top-Tier exchanges recorded in its history.
Bybit Sees Significant Increase in Derivatives Market Share
Multiple exchanges saw significant USD-denominated growth in trading volume in January, as overall volumes across both spot and derivative markets increased 70.3% to $2.90tn in the first month of January.
Bybit particularly stood out this month as the only integrated derivative exchange with triple digit month-on-month growth – rising 115% to $301bn in trading volume. It has now recorded its highest ever market share in derivative markets, sitting at 14.6%, now the second largest derivative exchange only behind Binance.
BTC-USDT Spot Trading Saw a 37% Increase in January
BTC spot trading with USDT rebounded last month, increasing 37.0% in January to 10.5mn BTC. BTC-BUSD and BTC-USD followed, rising 27.4% and 33.5% to 4.67mn BTC and 2.26mn BTC, respectively.
The rise in BUSD trading volume relative to other fiat currencies or stablecoins reflects the increase in trading volume on Binance following the collapse of FTX. USDC remained the next favoured stablecoin, increasing 29.3% to 101k BTC.
BTC and ETH Futures Volume Are Up 59.1% From the December High
CME’s ETH futures reached $8.09bn in January (up 68.2% since December). Meanwhile, CME’s BTC futures volumes rose 57.2% to $20.8bn. On aggregate ETH + BTC futures volumes rose 60.1% to $28.9bn. This does not include Micro Futures.
A combined volume of BTC $3.24bn in BTC, and ETH futures, were traded on the 26th of January - a daily maximum for the month, up 59.1% from the intra-month high in December.
