Bitcoin Exchange Hits $1 Trillion In Trading Volume (#GotBitcoin)
“One Trillion Dollars traded in a year; the stats don’t lie. BitMEX ain’t nothing to fucking with. @Nouriel I’ll see you on Wednesday.” Bitcoin Exchange Hits $1 Trillion In Trading Volume (#GotBitcoin)
The parabolic advance that started on April 2, caused a lot of FOMO, pushing the price as high as $13,800; the rally ended on June 26, and it has been a slow day ever since.
BitMEX, one of the most famous leverage trading exchanges, known for its Bitcoin perpetual contract, surged with traders trying to profit from the rally. Subsequently, the rally blindsided a lot of traders causing massive liquidations of shorts.
Surge or not, the total trading volume of Bitcoin on BitMEX reached whopping levels, as compared to the start of 2019, when total trading volume over 24 hours was hovering just below $1 billion, and during some days it even reached the $1 billion mark.
As of today, the total trading volume of BitMEX, as seen on CoinMarketCap, was over $5 billion and it is more than 18% of the total trading volume of Bitcoin which stands tall at $27 billion. BitMEX is also the top contributor to Bitcoin trading volume.
Arthur Hayes, the co-founder, and CEO of BitMEX, tweeted that the total trading volume of Bitcoin over a week had hit $1 trillion.
BitMEX’s leverage trading offers its users a wide variety of popular coins that include XRP, Litecoin, Cardano, Bitcoin Cash, EOS, Ethereum, etc.
Arthur Hayes is set to debate the Bitcoin critic, Nouriel Roubini aka Dr. Doom, at Asia Blockchain Summit in Taipei on July 2 and July 3.
A Twitter user @chainofSATs, tweeted:
“Sats don’t lie, Arthur! Sats* 🤠 @Nouriel the best way to defend yourself now is to just buy more Bitcoin than your biggest competitors and flip the script on them.”
Another Twitter user @thalamu_, commented:
“Congrats on your success, and thank you for creating such a great platform.” Bitcoin Exchange Hits $1,
Coinbase Broke Traffic Records And Saw Massive Volume During Market Collapse
Coinbase saw record site traffic and a massive surge in 24-hour trading volume during last week’s coronavirus-driven market swings, CEO Brian Armstrong said in a statement shared with CoinDesk.
The San Francisco-based crypto exchange said it processed $2 billion in crypto last Thursday and Friday (for comparison, Coinbase saw $394 million in volume over the past 24 hours, according to Bitwise). Last Thursday also beat Coinbase’s previous traffic record by over 50 percent, Armstrong said.
Where other platforms experienced issues and outages, Armstrong noted that Coinbase remained operational, saying the exchange has been preparing for a crisis “for the last couple years.”
“This hard work contributed to our stability last week while many platforms, in both crypto and traditional equities, struggled with the increased volume,” Armstrong wrote, crediting the company’s engineering team specifically.
Jesse Pollack, the head of engineering for Coinbase’s consumer division, told CoinDesk in a phone call the platform has been preparing since the 2017 bull run, focusing on both the actual exchange’s matching engine as well as consumer products such as its API.
Some of this work included horizontal scaling on the database end, Pollack said. The company said it was scaling out its databases to enable more reads without interrupting writes (meaning the exchange can view the data stored on its servers while simultaneously adding new data without either operation slowing down the other as transactions are executed).
Coinbase’s COVID-19 Response
The move comes, of course, as Coinbase and other firms deal with coronavirus-induced remote work mandates. Armstrong has for weeks publicized his exchange’s pandemic response in a regularly updated blog series. California announced a statewide shelter-in-place order on Thursday.
Pollack said that though Coinbase’s employees are currently remote (the exchange began implementing remote work last week in response to the COVID-19 outbreak), the engineering team used a combination of automated alerts and chatrooms to keep up with the spikes in traffic.
“If we’re going to be hitting higher highs than what we’ve seen, we’ll generally pull together people into a hangout just have them available, ready, hanging out, chatting there, looking at all the metrics,” he said.
Still, Pollack told CoinDesk that trading platforms are complex, and a lack of mistakes doesn’t necessarily mean a platform won’t experience any issues.
“From an engineering camaraderie perspective, I think it’s just worth highlighting that scaling products is really freaking hard, and we put a lot of work into it and I think that paid off last weekend,” he said.
High Volume Surge Propels Bitcoin Price To A New All-Time High At $29,000
Bitcoin bulls obliterated the $28,500 resistance with a high-volume surge, but the $30,000 level could still pose a challenge.
Within the last hour, the Bitcoin (BTC) price rallied to set a new all-time high at $29,000.
On Dec. 29, the Bitcoin price attempted to push through a stiff resistance cluster at $28,500, but after rallying to $28,600, the price rejected with a sharp correction to $27,300.
Today’s move to $29,000 came after a high-volume surge pushed through the $28,500 resistance, but the battle for $30,000 is far from over.
Data from Material Indicators shows there are still sell walls near the $30,000 level at Binance and other major cryptocurrency exchanges.
Barring another sustained high-volume surge in purchasing volume, the presence of sell walls suggests that a rally to $30,000 may trigger a strong sell-off and cause BTC price to revisit key underlying supports at $28,000 and $27,300, where the 20-day moving average currently resides on the 4-hour timeframe.
$30,000 Then Moon?
Many retail traders expect the Bitcoin price to soar well above $30,000 once the psychological barrier is overcome, but Nunya Bizniz, a popular trader on Twitter, pointed out that above $30,000, Bitcoin price begins to look a bit overextended, as the 1.618 Fibonacci retracement is at $30,196.
Given that Bitcoin price has rallied 64.9% since the start of December, hitting the 1.618 Fib level could provide a signal that a pullback is on the cards, but ultimately, volume will be the primary indicator of where the price may go.
Currently, Bitcoin price has gained 302.6% for the year and is vastly outperforming gold and traditional markets like the Dow and S&P500. For Q4, BTC has rallied by 168.32%, securing the second-best quarterly performance since 2017 when the digital asset gained 210.13% in Q4.
Crypto Trading Volume Slows, Boding Ill For Exchanges
* Total Spot Volumes Hit Lowest Level Since December 2020
* Exceptionally Quiet, Fearsome, Uncertain Time In Crypto
During the brutal cryptocurrency selloff last month, volumes also tumbled — a development that doesn’t bode well for exchanges that trade the digital tokens.
Total spot volume slumped to $1.8 trillion in January, a decline of more than 30% from the previous month, according to a report from CryptoCompare. That was the lowest turnover since the end of 2020. Even at its intra-month peak of $91 billion on Jan. 24, trading was down nearly 50% from December.
“It’s just an exceptionally quiet, fearsome and uncertain time in crypto,” said Ed Hindi, chief investment officer and co-founder of Tyr Capital. “Smart money, as they say, doesn’t sleep, it doesn’t take holidays. But retail traders in crypto, they do take a break, especially when they get hurt,” he said, referring to an industry term for institutional and other bigger players.
The decline in trading volume will have a direct impact on revenues for Coinbase Global Inc. (ticker COIN) and Robinhood Markets Inc. (HOOD), according to Julie Chariell, a Bloomberg Intelligence analyst. Roughly 90% of COIN’s revenue and about 40% of HOOD’s are driven by crypto trading.
“HOOD already articulated expectations for softer earnings results for 1Q, partly due to the crypto slowdown,” she said. COIN hasn’t yet held its quarterly conference call, but when it does, its first-quarter outlook “will likely be soft.”
Investors in digital currencies and other riskier assets have been shaken so far in 2022, rattled by a newly hawkish Federal Reserve that’s getting set to withdraw stimulus from the system.
Bitcoin, the largest cryptocurrency, has lost a fifth of its value this year, while some smaller coins, as well as tokens influenced by social-media sentiment, have posted even larger drops.
An index tracking the largest 100 cryptocurrencies is down 26% year-to-date, while the Bloomberg Galaxy DeFi Index, which bundles some of the largest decentralized finance protocols and apps, has tumbled 31% in the same stretch.
Demand for all things crypto had skyrocketed in 2021, with crypto-asset manager Grayscale Investments finding that a majority of investors had gotten involved with the asset class during the year. That means the recent slump could be painful for anyone who got in relatively recently. In fact, a recent Glassnode analysis found that almost all of the supply held by short-term investors is underwater.
“Ordinary mortals’ interest may take more time to heal,” James Malcolm, head of foreign exchange and crypto research at UBS, wrote in a note, noting, however, that that’s not necessarily the case in the venture-capital space.
It doesn’t help that memories of the last “crypto winter” — a phrase endemic to the digital-asset space that refers to a sharp slump followed by months of doldrums — are renewing fears that a repeat could be playing out currently. The last such decline happened in 2018, when Bitcoin fell roughly 80% and subsequently took more than a year to reach another high.
“Even though Bitcoin has its own very significant fundamental underpinning, there is that element of just rampant speculation that plays a role,” said Jurrien Timmer, director of global macro at Fidelity Investments.
You’re Not Imagining It, Markets Really Are Thinner Now
It doesn’t take as much to move prices as it once did.
If it somehow feels as if cryptocurrency markets are relatively quiet, that’s because they are. That is, trading volumes as a percentage of market cap in many of the major cryptocurrencies are lower compared with previous months. The end result is that it may take smaller amounts of capital to move the markets wildly.
Just a year ago — Feb. 13, 2021 — bitcoin was trading at around $47,000. The day’s trading volume on centralized and decentralized exchanges taken together was nearly $62 billion and the market cap was just shy of $840 billion, according to data from CoinGecko. Thus, volume was about 8% of market cap.
On Wednesday, Feb. 9, 2022, bitcoin changed hands at $44,000, putting market cap at $837 billion. Yet volume was just $29 billion, or 3% of value.
That the market cap now is just about the same as a year ago drives home the point that the relative volume drop isn’t necessarily a function of price. The two examples given are representative rather than aberrations; for the month of February 2021, daily bitcoin volumes averaged around 8% of market cap, and over the past 30 days, it’s been 3%.
The drop-off for ether is even more dramatic. A year ago, the ratio of volume to value averaged 20% every day in February. Now it’s 4%.
Fine, those are the big two in crypto, but surely the same hasn’t happened elsewhere, you may say. However, you’d be wrong.
Layer 1s may be the talk of the town these days, but trading volumes on exchanges haven’t kept up with skyrocketing market caps. A year ago, February daily volumes versus value in BNB, cardano, solana and avalanche averaged 22%, 25%, 9% and 17%, respectively. Over the past 30 days, it’s been 2%, 5%, 6% and 4%.
As this data includes decentralized exchanges, the drop can’t be attributed all that much to the rise of decentralized finance (DeFi). Besides, decentralized exchange volumes in February 2021 were above $60 billion, according to data from Dune Analytics and published on DeFiPrime.com. That works out to a little more than $2 billion per day. In January, the total was $100 billion or north of $3 billion per day.
Yet ether, still the most important currency in decentralized finance, saw average daily volumes over the past month of $15.6 billion, but that’s down from $38 billion a year ago.
Speaking of DeFi, ratios in that sector also took a tumble, failing to keep pace with exploding values. Uniswap, which has the lion’s share of DeFi transactions and market cap for its token, was worth $6.8 billion a year ago and saw its token change hands to the tune of $1.5 billion daily.
Now its market cap is $5.6 billion, and volumes on the uniswap token average just $223 million. Aave and cakeswap have suffered similar fates, albeit using smaller values.
Thinner markets, of course, mean that it doesn’t take as much to move prices as it once did. For an example, look no further than a week ago, Saturday, Feb. 5, when bitcoin finally broke above $40,000 and stayed there for the first time in over a week.
Volumes the previous day were $16 billion, and on Saturday they were $25 billion. Again, these figures are low even by recent standards, but they serve as a reminder that it doesn’t take much to move a market.
That may be something to think about should we see large institutional entrants anytime soon.
Fading Volatility Could Dent Crypto Trading’s Appeal
Tech stock turmoil outstrips bitcoin volatility in rare reversal. Tech shares have posted greater relative moves than Bitcoin.
The world’s largest cryptocurrency has been a relative snoozer six weeks into 2022.
Based on five years of price movements, Bitcoin has moved more than one standard deviation from its average in either direction just five times so far this year, according to data compiled by Bloomberg.
That compares to 12 times for the tech-heavy Nasdaq 100 index. The only other time that’s happened in the last five years was in 2020, when the onset of the pandemic roiled equity markets.
Growing jitters over how aggressively the Federal Reserve will need to tighten policy to combat decades-high inflation have fueled the historic volatility in richly valued tech stocks. Bitcoin hasn’t been battered to the same degree, in part because a large amount of leverage was drained from markets amid the cryptocurrency’s 50% drawdown from November to mid-January, according to Miller Tabak + Co.’s Matt Maley.
“At its worst level, Bitcoin was down 50% while the Nasdaq 100 was down 15% at its lowest level — 50% declines have a way of wringing out a lot of leverage in an asset,” said Maley, the firm’s chief market strategist. “Since there is likely still a lot of leverage in many of the big Nasdaq 100 stocks, it makes sense that the volatility would be much higher.”
The Nasdaq 100 has dropped nearly 13% so far in 2022, outpacing an 8% decline in Bitcoin. The tech-heavy index has proven more volatile than Bitcoin this year despite having fewer trading days (cryptocurrencies trade all weekend long).
There’s still a tight linkage between the two asset classes. Bitcoin’s 40-day correlation coefficient with the Nasdaq 100 stands near all-time highs, according to data compiled by Bloomberg.
January’s brutal Bitcoin selloff — which sent prices below $33,000 — appears to have left a lasting mark on risk appetite. Total spot volume on crypto exchanges slumped to $1.8 trillion in January, a decline of more than 30% from the previous month, according to a report from CryptoCompare.
Waning turbulence and trading volume could spell trouble for crypto markets, where volatility is part of the appeal. A big catalyst for Bitcoin’s 2017 bull run was the fact that stocks were fairly boring, according to Kraken’s Juthica Chou. The Nasdaq 100 posted just 11 moves of one standard deviation or greater in 2017 compared Bitcoin’s tally of 92.
“Certainly as there’s opportunity in the broader market, that will take away a little bit from allocating capital to crypto,” Chou, head of OTC options trading at Kraken, said on Bloomberg’s “QuickTake Stock” broadcast. “At the end of the day, Bitcoin is the size of one large tech company. It’s not necessarily going to be able to produce the returns that some these larger, high-frequency firms may look at.”
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