Institutional crypto activity is on the rise, evidenced by the significant upticks in daily trading volumes on Coinbase’s international exchange and various spot Bitcoin exchange-traded funds (ETFs).
Coinbase CEO Brian Armstrong announced on Feb. 20 that the international exchange platform had achieved a milestone, surpassing $1 billion in daily trading volume for the first time. This exchange, based in Bermuda, caters to professional non-US traders and offers crypto perpetual futures trading.
Established outside the United States due to regulatory challenges and legal battles, the exchange’s success highlights a growing demand for perpetual futures products, prompting Armstrong to express hope for their eventual introduction into the US market.
Perpetual futures contracts are derivatives that enable traders to speculate on the future price of cryptocurrencies without needing to possess the underlying assets. Unlike traditional futures contracts, perpetual futures have no expiration date, allowing traders to maintain positions indefinitely.
The surge in trading volume on Coinbase’s international exchange underscores institutional investors’ interest in such derivative products.
Furthermore, the recent launch of a new set of spot Bitcoin ETFs in the US has also witnessed remarkable trading volumes. Bloomberg senior ETF analyst Eric Balchunas reported that these ETFs collectively experienced their highest trading volume day since their inception, with approximately $2 billion in combined trading on Feb. 20.
Notably, VanEck’s Bitcoin Trust (HODL) saw particularly high trading volumes, nearing $400 million for the day, marking a new record. Other Bitcoin ETFs, such as the WisdomTree Bitcoin Fund (BTCW) and the Bitwise Bitcoin ETF (BITB), also achieved new daily volume records.
Balchunas expressed surprise at the sudden and explosive increase in the number of trades, speculating about potential influences from social media platforms like Reddit or TikTok. However, he noted that the surge in trading volume did not correlate with the fund inflow numbers, suggesting a discrepancy.
Despite the ambiguity surrounding the volume spike, VanEck CEO Jan van Eck welcomed the increased trading activity, indicating positive market sentiment towards Bitcoin ETFs.