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The over-the-counter (OTC) institutional cryptocurrency market experienced a significant uptick in the first half of 2024, with total spot transaction volumes soaring 95% year-over-year.
Institutional Crypto Trading Surges in First Half of 2024, Report Finds
According to a new report from Finery Markets, which analyzed two million spot trades conducted by institutions, the appetite for digital assets among institutional investors grew significantly. This surge in activity follows recent approvals for crypto-related investment vehicles, including the successful launch of a Bitcoin ETF.
Ethereum, the second-largest cryptocurrency by market capitalization, saw its trading volumes rise by 32% in the first half of 2024 compared to the same period in 2023. The potential approval of Ethereum ETFs is expected to further drive institutional participation in the market.
"The recent approval of crypto-related vehicles has sparked institutional interest in adopting crypto for the long term," Finery Markets commented in the report. "However, we believe that the full impact of ETF approvals on the market may not be fully realized until six to nine months later."
The report also highlights a shift in trading patterns, with crypto-to-crypto trades demonstrating a 50% year-over-year growth. In contrast, crypto-to-fiat pairs decreased by 12% in the first six months of 2024. Notably, transactions involving stablecoins across all blockchains and layers surged 2.6 times year-over-year.
Experts have acknowledged for several months that without the support of institutional investors, the volumes and prices of Bitcoin would not have increased as significantly. For instance, the cryptocurrency market experienced a substantial surge in value, growing from $1 trillion to $2.5 trillion from October 2023 to March 2024.
Altcoins on the Rise
While Bitcoin and Ethereum continue to dominate the space, the report indicates varying growth rates among altcoins. Tron (TRX) experienced the most significant surge, with a 202% year-over-year increase, followed by Binance Coin (BNB) at 129% and Litecoin (LTC) at 80%. However, Ripple (XRP) bucked the trend with an 18% decline.
“The growth rates seen in altcoins can largely be attributed to a low base effect resulting from a downturn in the first half of 2023, which was caused by the collapse of FTX and its subsequent impact on the cryptocurrency market until the first half of 2024,” Finery Markets added.
The cryptocurrency market's growth accelerated in the second quarter of 2024, achieving a 110% year-over-year increase in customer transaction volumes, up from 80% in the first quarter. April saw the peak growth rate at 158% year-over-year, following a 56% increase in January.
Despite the overall positive trend, institutional participation in altcoins remained relatively low, with the top five alternative cryptocurrencies accounting for just 5.4% of the total trading volume.
The report suggests that the changing regulatory environment is becoming more favorable towards digital assets, providing traditional financial institutions with a clear path to enter the crypto space using established financial instruments.
Finery Markets is the first crypto ECN to receive the SOC 2 Type 1 certification. Earlier this year, Finery Markets established a collaboration with Hidden Road. This partnership is characterized by incorporating Finery Markets’ leading product, FM Liquidity Match, into Hidden Road’s activities, which primarily involve prime brokerage services for crypto spot transactions.