Cryptocurrency Trading Volumes Outgrow Major Equity Markets
With more than $16 trillion traded on the exchanges daily, cryptocurrency trading volumes have already exceeded those of the biggest public equities markets. According to Ark Investment Management analyst Yassine Elmandjra, the yearly trading volume of FAANG stocks is second only to cryptocurrencies, with $12 trillion reported.
FAANG stocks are equities representing technology firms such as Facebook, Amazon, Apple, Netflix, and Alphabet, which is the holding company of Google. Yassine went on to say that the yearly increase in cryptocurrency trading volumes is “over 8-fold higher than 2020.”
Trading volumes in crypto marketplaces have increased dramatically this year. Particularly, Coinbase — a US-based mega-crypto exchange – saw trade volumes in the latest quarter surpassed spot market trading volumes on y-o-y basis.
Figures for the second quarter exceeded $460 billion, indicating a 1550% year-on-year rise from $28 billion. Surprisingly, institutional trading activity has accounted for the overwhelming majority of aggregate trading volume. Institutions represented $17 billion in trading volume in Q2 2020, but this number has risen to $317 billion in Q2 2021.
Aside from that, the rapid growth is most likely linked to the late 2020-early 2021 Bitcoin run. In October-December of 2020, the biggest cryptocurrency had a 260% bull run. Because they are linked to Bitcoin, all other cryptocurrencies jumped on the bandwagon. Regardless of the fact that the April-May 2021 surge ended with a 55% pullback, volume has been pretty steady.
Several institutions began providing crypto-related facilities during the rise in order to capitalize on the cryptocurrency market’s bullish streak. Ark Investment is one among them, having secured significant private investor financing to help them achieve their objective.
By expanding their offerings, the businesses have managed to respond to the need for crypto-linked financial services. As per our statistics, BTC was changing hands at $44,848 while writing this article, up 12.9% in the past seven trading sessions.
Ethereum, the second-largest cryptocurrency, was trading at $3,144, up 15.4% in a week. Furthermore, the total cryptocurrency market value has risen by 3.44% in the last day to $1.92 trillion. Nonetheless, the cryptocurrency economy is still facing a plethora of challenges. For example, unsustainable digital assets using proof-of-work consensus mechanisms, the largest of which being Bitcoin, have been accused.
Senator Elizabeth Warren of the United States has been vocal against “ecologically harmful cryptocurrencies,” claiming that Bitcoin uses a lot of energy than an entire nation. Furthermore, SEC Chair Gary Gensler has requested greater regulatory power to fight the financial danger posed by cryptos.
Presently, the Department of Justice is investigating the biggest stablecoin, Tether, and its leaders for suspected financial fraud. Ripple (XRP) is in hot trouble with the SEC after allegedly offering unregistered securities. Crypto exchanges such as Binance and crypto-firms such as BlockFi have also been added to the authorities’ blacklist.