Cryptocurrency exchange volumes have been on the rise, coinciding with Bitcoin’s close proximity to the $30,000 price threshold, according to data from The Block data dashboard. Over the past month, there has been a noticeable uptick in trading activity, with The Block’s seven-day moving average for daily volumes across the crypto industry’s spot platforms climbing from $9.38 billion on September 26 to over $15 billion on October 20.
While this increase in trading volumes is promising, it’s important to recognize that spot volumes for the cryptocurrency asset class remain at historically low levels. In fact, cryptocurrency exchanges only recorded $311 billion in volume last month, marking the lowest level since 2020, as reported by The Block’s data dashboard.
This surge in trading volumes aligns with a recent rally in cryptocurrency prices and increased market volatility. Part of this market activity can be attributed to false rumors circulating about the potential approval of a spot exchange-traded fund by the US Securities and Exchange Commission (SEC).
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The uptick in trading activity is welcomed by cryptocurrency exchanges, as they rely on market volatility and higher trading volumes to generate profits. For instance, Coinbase, a major cryptocurrency exchange set to report earnings for the most recent quarter on November 6, has experienced a significant drop in trading volumes during the third quarter, with Bloomberg News reporting a decline of more than half.
It’s worth noting that the subdued trading environment is not unique to the cryptocurrency market. In the US equities space, Charles Schwab, a prominent brokerage firm, reported a decrease in daily average trades (DATs) between the first and third quarters. This decline is attributed to challenges in retail trading, influenced by factors such as US Federal Reserve policy and the resumption of student loan payments.
In summary, cryptocurrency exchange volumes are showing signs of life, although they remain at historically low levels. The recent uptick in trading activity is a positive development for the crypto industry, which has been facing challenges amid regulatory uncertainty and subdued market conditions. This trend highlights the influence of external factors and market dynamics on trading volumes, which is a common theme across financial markets.
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