In just 12 short hours, the price of Bitcoin dropped by 13% yesterday, erasing more than $12 billion from Bitcoin’s market capitalization. Prior to the crash, the market was experiencing the lowest 30-day volatility since December 2016.
Low volatility levels created an unfavorable trading environment, which led to a trading volume low for the year. Low volatility environment was putting pressure on trading firms, which were forced to shakeup their strategy. But as volatility returned yesterday, the traders rejoiced. According to The Block’s research, the traded volume increased by 80% across the board in the last 24 hours.
Some exchanges saw an even more dramatic increase. Coinbase’s volume, for example, skyrocketed by nearly 400% in the last 24 hours. On November 11, Coinbase recorded volume of $40 million. Today, volume is reaching $430 million, which is more than a 10 fold increase in the last four days. This suggests that the increased volatility isn’t the only factor contributing to the increase in volume. Traders also anticipate the hard fork of Bitcoin Cash, which will take place at around 16:40 UTC today (November 15). The increased activity is likely the combination of both a rise in volatility and the Bitcoin Cash hard fork.
Other exchanges (Binance, Bitfinex, Kraken) are seeing similar growth in volume (see charts below).
It’s also interesting to point out that the volumes on exchanges are very correlated. The Block looked at volumes on Coinbase, Binance, Bitfinex and Kraken. Apart from Binance, the volumes on remaining three exchanges have been extremely correlated (see graph).
The Block will continue monitoring whether the increase in volume will persist post hard fork.
The post Volumes on exchanges soar as markets welcome volatility appeared first on The Block.
Volumes on exchanges soar as markets welcome volatility written by Larry Cermak @ https://www.theblockcrypto.com/2018/11/15/volumes-on-exchanges-soar-as-markets-welcome-volatility/ November 15, 2018 Larry Cermak