Bybit's 2024 Institutional Report revealed a significant increase in monthly trading volumes across several centralized exchanges (CEXs) from October 2023 to March 2024.
During this period, the market capitalization of the crypto sector grew from just over $1 trillion to over $2.5 trillion.
Bullish trends and BTC as a hedge
According to reportOKX's trading volumes have soared an impressive 278% since October last year, closely followed by Binance with a 239% increase.
Bybit Exchange has become one of the fastest growing platforms, showing a remarkable 264% growth in trading volumes. Additionally, US exchange Coinbase saw a slight uptick in volumes, up 193%, slightly below the industry average growth rate of 255%.
The substantial growth in CEX volumes can be attributed primarily to the BTC price surge, which coincided with the approval of spot Bitcoin ETFs in the United States.
The report's findings reveal bullish trends in the derivatives market, particularly for Bitcoin (BTC) and Ethereum (ETH).
Despite sideways movements in March and April, investors displayed bullish sentiment, as evidenced by the large buying premium seen for BTC and ETH futures.
This trend suggests that investors are optimistic about the long-term price prospects of these two cryptocurrencies as the year progresses.
The report also highlights the role of BTC as a hedge in traditional financial (TradFi) wallets. BTC and ETH have correlations with traditional financial assets, such as stock indices and fixed income, that are consistently below 3%.
Allocating just 5% of a portfolio to equally weighted BTC and ETH can improve the risk-adjusted returns of the S&P 500. This allocation can increase the Sharpe ratio from 2.20 to 3.15, which which represents an improvement of 43.6%.
This effect is felt more when investors accept higher risk and allocate more funds to cryptocurrencies.
Challenger Channels and the Resurgence of Venture Capital Funding
Challenger chains are also doing well, with the native tokens of these platforms outperforming ETH since Q4 2023.
Solana (SOL), in particular, has become one of the most successful among these challenger tokens. It has maintained its momentum since 2021 as a challenger channel in terms of total value locked (TVL) and trading volume.
Venture capital (VC) funding of the crypto industry has also seen a resurgence. Although infrastructure projects remain the main target for venture capital investments, the report reveals that investments have been made in various sectors, including gaming and AI projects.
In the fourth quarter of 2023, venture capital deals increased 21% to 174, with disclosed funding reaching $1.42 billion, an increase of 29%. Q1 2024 saw 243 deals with disclosed funding totaling $1.94 billion, representing an additional 36% increase from Q4 2023.
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