TL;DR: Bitcoin's daily trading volume refers to the total value of bitcoin that is traded across global exchanges each day. This metric captures investor activity and demand for bitcoin and has seen extreme volatility over bitcoin's history, ranging from less than $50 million to over $70 billion daily.
Let's dive deeper into the topic.
As the first and most highly valued cryptocurrency, bitcoin commands unrivaled attention and trading activity within the cryptocurrency market. The coin's notoriety and penchant for dramatic price swings also make it a frequent target for speculation by investors and traders around the world.
A key metric for gauging bitcoin's appeal and market activity is its daily trading volume. This simply refers to the total dollar value of bitcoin transactions occurring across all exchanges over a 24 hour period. Analyzing bitcoin's trading volume can provide important clues into the coin's current popularity, value, and potential.
Key factors influencing the ebbs and flows of bitcoin's daily volume include adoption and interest from retail and institutional investors, cryptocurrency market dynamics, protocol upgrades, forks, and regulatory changes. Let's explore some standout trends.
Early Days - Thin Trading Activity (2009-2013)
In bitcoin's formative years following its 2009 launch, daily exchange trading volume remained relatively thin. With bitcoin's price still in the single digits, appeal limited mostly to tech aficionados, and exchanges just getting started, sparse trading activity was to be expected.
Average daily volumes floated in the tens of thousands to low hundred thousands of dollars range during these wilderness years. Occasional minor spikes generated at most a few million in volume.
Rising Recognition - Steady Growth (2013-2017)
As cryptocurrency captured growing public consciousness from 2013 onward, bitcoin trading activity saw a steady uptrend. The infamous Bitcoin pizza transaction in 2010 valued BTC at just $0.003. By late 2013, bitcoin surpassed $1,000 to begin an order of magnitude spike.
With bitcoin prices and visibility on the rise, exchange trading volume climbed reliably up into the mid-hundred millions of dollars daily in 2015, crossing into the billions by 2017. This period saw bitcoin go from patently obscure to a full-fledged asset class attracting serious attention.
Explosion - Global Frenzy (2017-2018)
2017 marked bitcoin's definitive pivot into the mainstream as its price went parabolic. Media and retail investors piled in seeking to capitalize on skyrocketing values. Hype hit a fever pitch as bitcoin approached $20,000. Correspondingly, daily trading volumes skyrocketed to staggering levels.
In late 2017, bitcoin daily volume routinely exceeded $15 billion as the asset's volatility became legendary. As the flagship cryptocurrency, bitcoin trading came to dominate exchange transactions. On December 14, 2017, bitcoin posted an all-time high of over $73 billion in 24-hour volume.
This crescendo mirrored bitcoin's peak price mania. Volumes gradually tapered from these unsustainable levels but remained robust through 2018 before declining as the crypto market cooled off. The 2017-2018 window exemplified a period of peak enthusiasm with bitcoin as the focal point.
Maturing Market (2019 - Present)
Since 2018, bitcoin trading volume has found a less volatile settling point, generally fluctuating within a range of $15 billion to $60 billion daily. This signals more stability and maturity entering the market as speculation dies down from the frenzied highs.
Momentum has also shifted to altcoins gaining higher prominence and bitcoin capturing less overall market share. Bitcoin remains the clear leader but its trading volume reflects a diversifying crypto asset landscape. Periodic volatility still occurs but with less intensity compared to bitcoin's formative trading years.
Relation to Bitcoin Price Trends
Trading volume often closely tracks with bitcoin's price patterns. When prices spike or crash, trading activity tends to follow. Volatility breeds higher volume.
For example in 2021, as bitcoin surged again past its former $20,000 record to new highs over $60,000, trading volume also steadily ramped up and surged. When bitcoin subsequently dropped back below $30,000 in mid-2021, volume tapered as well.
Trading volume can also sometimes signal price direction, with higher volume pointing to a potential price rise or decline ahead. Extended periods of high volume activity could precede major price moves.
Key Factors Influencing Volume
A variety of external developments help explain bitcoin's trading volume fluctuations over the years:
- Mainstream Media Coverage - News hype cycles surrounding bitcoin directly impact trading.
- New Investor Entry - Surges of retail and institutional interest add volume.
- Market Volatility - Mania fuels speculation and transaction activity.
- Exchange Growth - More platforms and accessibility aids volume.
- Altcoin Activity - Volume shifts across cryptocurrencies as new assets emerge.
- Regulatory Moves - Governmental shifts can positively or negatively affect trading activity.
- Protocol Upgrades - Network changes like the 2017 Segwit upgrade can buoy volume as investor optimism grows.
- Macroeconomic Conditions - Periods of global uncertainty sends investors to bitcoin as a safe haven asset.
- Significant World Events - Global crises increase reliance on non-sovereign assets.
Top Bitcoin Exchanges by Volume
The geographic distribution of trading activity provides clues into where bitcoin's appeal is strongest. Asian exchanges like Binance and OKEx tend to dominate.
Here are the top bitcoin exchanges globally by volume as of July 2022:
- Binance - $8.7 billion
- Coinbase - $4.4 billion
- OKEx - $3 billion
- Kraken - $2.6 billion
- Kucoin - $2 billion
The competition between exchanges for trading volume and wallet holdings is fierce. Rankings shift regularly based on user sign-ups, partnerships, and exchange outages.
Despite some crypto exchange hacks, these reputable regulated exchanges with top liquidity remain the best options for trading significant bitcoin volume.
Future Trading Volume Outlook
Predicting bitcoin's future trading volume involves evaluating the mix of factors likely to increase and decrease activity.
Potential volume growth drivers include:
- Mainstream & Institutional Adoption - More companies adding bitcoin to treasuries and retirement portfolios
- Blockchain Integration - Bitcoin's role expanding through further business blockchain integration
- Enhanced Investor Access - Simpler retail investment avenues like corporate ETFs emerging
- Bullish Price Action - Stimulated trading activity if prices return to all-time highs
- Global Hedging - Expanded reliance on non-sovereign assets as economic uncertainty persists
Potential barriers that could hinder volume growth:
- Oversaturation - Slowing hype diminishes speculative volume
- Stagnant Prices - Lack of volatility reduces trading activity
- Competitor Assets - Further migration of volume to altcoins
- Prohibitive Regulation - Governmental trading limits introduced
- Exchange Hacks - Platform outages curtail accessibility and volume
While the timing and magnitude of bitcoin's next defining volume spike is unclear, its trading dominance and significance within the cryptocurrency ecosystem remains unmatched. The pioneer asset's deep liquidity pools, brand recognition, and history of rampant volatility will likely continue attracting high transaction volume compared to other coins. But bitcoin's trajectory is sure to stay unpredictable.