Crypto Exchanges Surpass $1 Trillion Monthly Trading Amid Spot ETF Optimism

In a significant development for the cryptocurrency market, monthly trading volumes on crypto exchanges have surpassed the $1 trillion mark for the first time since September 2022.

According to data from crypto research and news platform The Block, December’s trading volume reached an impressive $1.1 trillion, marking a notable increase from the last recorded high in May 2022 of $1.35 trillion.

Notably, leading the charge in December’s trading frenzy was Binance, contributing 39.3% of the total volume with a staggering $432.7 billion. Upbit followed with an 8.3% share, amounting to $91.8 billion, while OKX secured 8% with a trading volume of $87.5 billion.

The unexpected surge in trading activity during December is attributed to the prevailing optimism surrounding the potential approval of spot Bitcoin Exchange-Traded Funds (ETFs) in the United States. 

Stephen Zheng, the Head of The Block Research, highlighted the unusual activity, stating, “Given the holiday season, December is historically a slow month in the context of cryptocurrency trading. The fact that monthly spot trading volume exceeded $1 trillion for the first time in over a year truly indicates industry optimism regarding the impending approval of a spot Bitcoin ETF and the resurgence of the bull market.”

However, analysts remain cautious about potential market reactions post-approval. Vetle Lunde from K33 Research anticipates a “sell on facts” scenario, as short-term investors may take profits upon receiving regulatory approval.

In its latest weekly newsletter, leading onchain analytics firm Cryptoquant also suggested a potential “sell-the-news” scenario following the approval of numerous spot Bitcoin exchange-traded funds (ETFs) in the United States. The firm’s analysis was grounded in the substantial unrealized profits held by investors due to Bitcoin’s recent surge.

Meanwhile, predictions from Polymarket indicated an 89% likelihood of approval for digital gold exchange-traded funds before January 15th, significantly up from the previous month’s 50% estimate. K33 Research had initially projected the approval of a spot Bitcoin ETF by January 10, 2024.

Elsewhere, Bloomberg’s ETF analyst, Eric Balchunas, gives a 10% chance of a temporary delay for the spot Bitcoin ETF approval this month. If not outright rejected, he noted on Tuesday that there’s a possibility the SEC may seek additional time but risk potential legal actions by applicants, akin to Grayscale, in case of a direct rejection.

As crypto enthusiasts eagerly await the approval of spot Bitcoin ETFs, the market’s optimism has translated into positive momentum for the world’s largest cryptocurrency.