- Trading volumes on centralized crypto exchanges hit a 7-month high in January, averaging $57.5 billion per day. This coincides with the launch of spot bitcoin ETFs in the US.
- Spot bitcoin ETFs allow mainstream investors easier exposure to bitcoin compared to previously approved futures-based ETFs.
- It’s uncertain if the volume uptick will continue given crypto market turmoil over the past year including exchange collapses.
Trading Volume Increases
Trading volumes on centralized exchanges reached their highest level since June 2022 last month as bitcoin ETFs debuted in the U.S.
Trading activity has picked up sharply from December lows, and volumes were up 15.4% from January 2022.
Impact of Bitcoin ETFs
The rise coincides with the long-awaited launch of spot bitcoin exchange-traded funds (ETFs) in the U.S. at the start of the year.
The ProShares Bitcoin ETF (BITO) launched in October 2021, but it and other approved ETFs were futures-based, meaning they did not directly hold bitcoin like the new spot ETFs do.
Instead, they invested in bitcoin futures contracts traded on the Chicago Mercantile Exchange, requiring a more complex structure.
The spot ETFs are seen as a milestone for the crypto industry, providing an easier way for mainstream investors to gain exposure to bitcoin.
It remains to be seen whether the early 2023 trading volumes are part of a longer-term uptrend.
Bitcoin prices have traded in a relatively narrow range over the past couple of months after plunging in 2022.
Some analysts think crypto markets need time to digest the collapse of exchange FTX before entering a new bull phase.
The health of crypto spot markets has also been a focus after lenders like Celsius and BlockFi imploded last year.
The launch of spot bitcoin ETFs has coincided with an increase in trading activity on crypto spot exchanges.
Volumes hit a seven-month high in January, which could be a sign of renewed interest by investors. But it is unclear if the pickup will be sustained given the recent turmoil.