In short
- Crypto trading volume on the top exchanges has flourished.
- That’s because of Bitcoin’s rising price, an analyst says.
- It’s also due to macroeconomic factors, says another.
As Bitcoin hit its highest ever, the volume of respectable exchanges increased 78.2% last month, a new report from CryptoCompare shows.
The number of top-tier exchanges, a category that CryptoCompare awards to exchanges that are safe, compliant, and attract high-quality investors, increased to $ 619 billion in October.
In the same month, Bitcoin’s price increased from $ 13,700 on November 1 to its highest ever level of $ 19,845 on December 1. Bitcoin broke its previous record record high, set in December 2017, on November 30.
Volume exchanges increased at the peak as traders rushed in to make the most of the bull market. Binance, the largest top-tier exchange by volume, traded $ 176.2 billion last month, up 133% compared to the previous month.
And derivatives trading doubled in November to reach its all-time monthly high of $ 1.32 trillion. Derivatives refer to products such as futures and option contracts. These are other ways to speculate on the price of Bitcoin. They contrast with instant trading, which refers to regular token exchanges.
The derivatives market last month represented nearly 60% of the entire crypto market, a 7% increase in market share from the previous month. For derivatives trading, Binance took the biggest blow, as trading increased 132% last month compared to October to $ 405 billion; derivatives trading on Huobi increased 96% to $ 291 billion; on OKEx, 83% to $ 235.9 billion.
So, good news for exchanges. Why the rise?
“Bitcoin trading and derivatives volume are benefiting from the virtuous cycle that is taking place as new asset ratings and become mainstream,” said Lou Kerner, a stablecoin analyst at Quantum Economics. Decrypt. “This creates more opportunities for sophisticated investors to use complex trading strategies that include buying or shortening the asset, and using derivatives, to create arbitration opportunities.”
Constantine Tsavliris, head of CryptoCompare research, explained Decrypt that the rise be overshadowed by “the macroeconomic background of unprecedented financial expansion and negative real interest rates, driven by COVID-19, has led investors of all kinds to view Bitcoin as a hedge against inflation.”
Recently, top investors have viewed Bitcoin as a hedge against fiat currency inflation. Coronavirus stimulation kits, such as those already issued by major governments in the world, as well as those produced by governments around the world, are causing concern that money could depreciate as central banks pay more money to pay off the debts of governments.
MicroStrategy, a US business intelligence company, buy $ 450 million in Bitcoin this past summer based on exactly that concern. Last week, the company announced the purchase of $ 50 million more. And yesterday only, the company said it intends sold $ 400 million worth of debt securities to buy even more Bitcoin.
“Should the currency lose weight, Bitcoin masks will leak from the overhead area. Put the mask over your own mouth and nose before helping others, ”CEO Michael Saylor tweeted on Dec. 1, one of many justifications to buy.
Disclaimer
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment or other advice.