The over-the-counter (OTC) institutional cryptocurrency market experienced significant growth in the first half of 2024, with total spot transaction volume up 95% year-on-year.
Report Shows Institutional Cryptocurrency Trading Volume Has Rised Sharply in the First Half of 2024
According to a new report from Finery Markets, which analyzed two million spot trades executed by institutions, appetite for digital assets among institutional investors has grown significantly. This surge in activity follows recent approvals of cryptocurrency-related investment vehicles, including the successful launch of a Bitcoin ETF.
Trading volumes for Ethereum, the second-largest cryptocurrency by market cap, grew by 32% in the first half of 2024 compared to the same period in 2023. The potential approval of an Ethereum-based ETF is expected to further encourage institutional participation in the market.
“The recent approval of crypto instruments has generated institutional interest in the adoption of cryptocurrencies in the long term,” Finery Markets commented in a report. “However, we believe that the full impact of the ETF approval on the market may not be fully realized until six to nine months from now.”
The report also highlights a shift in trading patterns, with crypto-to-crypto trades showing a 50% increase year-over-year. In contrast, crypto-to-fiat pairs have declined by 12% in the first six months of 2024. Notably, stablecoin transactions across all blockchains and layers have grown 2.6x year-over-year.
Experts have been acknowledging for months that without the support of institutional investors, Bitcoin volumes and prices would not have grown so significantly. For example, the cryptocurrency market experienced a significant surge in value, increasing 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 points to different growth rates among altcoins. Tron (TRX) saw the most significant surge, up 202% year-over-year, followed by Binance Coin (BNB) with a 129% gain and Litecoin (LTC) with an 80% gain. However, Ripple (XRP) bucked the trend, posting an 18% decline.
“The growth rate seen in altcoins can largely be attributed to the low base effect resulting from the downturn in the first half of 2023 caused by the FTX collapse and its subsequent impact on the crypto market until the first half of 2024,” Finery Markets added.
Cryptocurrency market growth accelerated in Q2 2024, reaching 110% annual growth in customer transaction volumes, up from 80% in Q1. April saw a peak growth rate of 158% annual growth, following a 56% increase in January.
Despite the overall positive trend, institutional participation in altcoins remained relatively low, with the top five altcoins accounting for just 5.4% of total trading volume.
The report says the changing regulatory environment is becoming more favorable to 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 SOC 2 Type 1 certification. Earlier this year, Finery Markets partnered with Hidden Road. This partnership is characterized by the inclusion of Finery Markets’ flagship product, FM Liquidity Match, into Hidden Road’s operations, which primarily include prime brokerage services for crypto spot transactions.