Cryptocurrency Market Sets Record Trading Activity Amidst Bitcoin Surge

This week’s sudden recovery saw a spike in activity across the board, achieving the highest daily trading volumes.

The 24-hour trading activity for the entire crypto market picked up significantly, reaching an all-time high of trading above $89 billion in 24 hours. The past few days saw Bitcoin (BTC) boom to nearly $5,000, with a handful of select altcoins rising to new temporary highs.

The increased trading activity is a result of several months of gradual growth, from lows under $10 billion’s equivalent in 24 hours. In the fall of 2018, activity slowed down significantly, only to pick up again noticeably in March, leading up to the past few days.

Most activity in the digital asset markets involves exchanges between BTC and altcoins, with a significant role for stablecoins, especially Tether (USDT). The increased activity does not reflect inflows of fiat. Instead, data from Stablecoinswar show that USDT is continuously picking up the pace of its daily turnover.

Usually, the “velocity of money” for USDT has been around 300%, meaning the entire USDT supply of about 2 billion coins was turned over three times in the past days. But the past few days saw the velocity of USDT accelerate, from about 600% on Tuesday as the trading bonanza was just picking up, to as high as 1,114% in 24 hours. The data from Stablecoinswar means that each USDT coin is moving through the crypto trading market more than 11 times a day.

This also means that the renewed rally is internally fueled, and not a sign of inflows from the general economy. The rise in Dow Jones above 26,000 points is only coincidential, as mainstream finance is still reluctant to inject funds directly into cryptocurrencies.

An additional caveat for the extremely high volumes is the fact that recent research showed that for most assets, a big fraction of the trading volumes may have been faked or bloated though bot or fake order activity. Still, crypto-to-crypto trading with increased volatility offers the potential for gains in BTC, or for using altcoins to achieve faster returns.

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