Reported activity from several retail and institutional crypto markets exhibited strong trading spikes on Monday, with Gibraltar-based LMAX Digital, one of the largest institutional bitcoin spot trading venues, with a total nominal volume of $1.79 billion, a 261% increase over the 30 days. average. The exchange indicated that this could be encouraging news, indicative of “renewed demand at reduced prices from players in the medium and long term.” San Francisco-based Kraken also saw daily spot volume jump from $599 million on Sunday to $2.1 billion on Monday – its futures volume more than doubled to $632 million.
Decentralized exchanges are also seeing increasing volumes. Analytics firm Dune reported that daily DEX volume reached $7 billion on Monday, up from $1.0 billion-$2.5 billion daily for the past month. Uniswap gained most of that surge in DEX activity, seeing its peak daily volume at $4.5 billion on Monday, up 137% from the day before.
The spike in client volume on the series of consecutive down days (see chart below) could be a sign of retail capitulation, while institutional money with deeper pockets may be getting bargains. The rarefied sentiment that followed the demise of Terra and now Celsius is exposing some poorly designed uses of blockchain technology, and the mess these two companies are leaving behind undermines confidence in other, more viable projects. This doesn’t help, especially during such a bleak macro picture looking at recessions and stagflation.
High-volume spikes in crypto and traditional assets follow major events, such as the 2001 dot-com bubble burst, the credit crunch bubble burst, and the covid crash in March 2020. Current high trading volume also reflects a market that is reassessing the impact of the Luna and Celsius disappointment on remaining crypto assets. As you can see below, many times these increases coincide with short and medium term lows.
Although the volume was accompanied by lower prices, it could also be encouraging and indicative of renewed demand for reduced prices from players in the medium and long term..
The market is calmer today, but we could see rising volumes once again if another major crash emerges in the crypto world, or we see excessive margin calls and DeFi pullbacks in the future. All of this will lend credence to what remains as a distinct possibility of increased contagion negatively impacting even strong digital asset projects.
This is not academic, as research firm Coinmetrics characterizes Celsius as a “high-leverage hedge fund” whose assets are deployed on DeFi platforms so that its products deliver double-digit returns. If Celsius requests capital from the DeFi protocols where it was lent, the two outcomes could be that the funds are not immediately available or that they are returns and cause a severe illiquidity in DeFi tokens that were dependent on performance. agricultural capital. This could create more panic among investors and trades.
On the bright side, the uptick in crypto bargain hunting by institutional firms is a sign that for all the doubts about the macro picture and certain crypto projects, optimistic investors may overlook those. temporary problems and are willing to invest fresh fiat in cryptocurrencies if the price is okay.