The rapid increase in the bitcoin price has been supplemented with a drastic increase in the volumes of crypto exchanges and crypto-based investment vehicles.
Fueled by the rise of bitcoin, the valuation of the crypto market has increased from around $111 billion to $237 billion since January, recording a $126 billion gain in a five-month span.
Exchanges are Seeing Record Volumes, Only the Beginning of Bitcoin Rally?
Over the past several days, major crypto exchanges and investment vehicles in the likes of BitMEX, Grayscale’s Bitcoin Investment Trust (GBTC), and the CME bitcoin futures market have seen record high volumes, as the demand for the dominant cryptocurrency spiked.
Arthur Hayes, the CEO of BitMEX, said on May 12 that BitMEX reached a daily volume of $10 billion, a new record for the widely utilized margin trading platform.
New record for BitMEX trading volume. Praise be to volatility and our wonderful traders! pic.twitter.com/iLMGdpz65n
— Arthur Hayes (@CryptoHayes) May 12, 2019
The CME bitcoin futures market, which at its previous peak accounted for more than $546 million of bitcoin’s daily volume, recorded $1 billion in trades as it opened on Monday.
“CME Bitcoin futures hit a record 22,542 contracts traded on April 4, equivalent to 112,710 Bitcoin with a notional value of $546 million, according to a release from the derivatives exchange operator. A majority of the trading volume on that day came in Asia hours with 12,634 contracts traded, CME said,” a Bloomberg report in April read.
The CME bitcoin futures market nearly doubled its previous peak recorded last month, indicating a surge in demand for the asset in the U.S. market, likely from accredited investors.
CME Bitcoin futures reached an all-time record high of 33.7K contracts on May 13 (168K equivalent bitcoin), up nearly 50% from the last record of 22.5K contracts on April 4. See how market participants are using $BTC to manage uncertainty: https://t.co/hDgraMj5pe pic.twitter.com/ct1xkjoJDF
— CMEGroup (@CMEGroup) May 13, 2019
Based on the parabolic price movement of bitcoin and the substantial increase in the volumes of crypto exchanges, Multicoin Capital general partner Vinny Lingham said it is entirely likely BTC is now at the start of a recovery, en route to test its all-time high at $20,000 in the near future.
What part of – ‘I’m bullish on Bitcoin if it breaks and holds $6200 for 24-48 hours’ is ambiguous? Yes, I’m now bullish on Bitcoin. Do I think we hit $20k in the next month? Absolutely not, but, anything is possible.
The only major concerns I still have right now are 1) fee stability/inflation impacting the network, 2) if Satoshi’s coins ever moved. Other than that, it’s entirely likely that we are at the start of a recovery and then on to test new Bitcoin highs. It might take a year or so, but we’re going to test $20k again at some point in the near future.
Could the Trade War Affect Crypto Markets?
Speaking on the TD Ameritrade Network, Ikigai Fund founder and former Point 72 portfolio manager Travis Kling said that bitcoin is a hedge against quantitative easing and possibly against the instability of the global financial market.
“This is a hedge against irresponsibility from governments and central bankers…the world is waking up to the value of a hedge against quantitative easing,” Kling said.
As the tension between China and the U.S. intensifies over the broken down trade talks and the imposition of additional sanctions by both governments, investors may look to bitcoin along with other safe haven assets such as precious metals like gold as a hedge.
Due to the relatively small market size of bitcoin and major crypto assets, there has been little evidence so far to suggest that investors are turning towards bitcoin amidst uncertainty.
Click here for a real-time bitcoin price chart.