Latest CoinMetrics Report Analyses Bitcoin’s Fragmented Volumes
With a resurgence of institutional interest in Bitcoin, cryptocurrency analytics company CoinMetrics anticipates that businesses and financial institutions looking to invest in cryptocurrencies will first want to look at its trading volumes.
In a preview of an upcoming research piece with ARK Invest, CoinMetrics applied different calculation methodologies to Bitcoin’s daily volumes and came up with significantly different results with each approach.
At the spot market level of aggregation, which the company assumes would be the most appealing for institutions, the report estimates that the trading volume of BTC spot markets on major exchanges quoted in U.S. dollars is $0.5 billion per day.
BTC’s volume figures in different markets. (Source: CoinMetrics)
While this represents a significant increase for Bitcoin, its daily trading volume on spot markets of only $4.1 billion is still minuscule in comparison to the spot volume of other asset classes.
Daily spot volumes for BTC, equity, bond, and FX markets. (Source: CoinMetrics)
Minuscule, But Showing Huge Potential
The conclusion from the CoinMetrics report is that Bitcoin, in its current state, is most comparable in size to a large capitalization stock than a distinct asset class. This could force a large institutional investor to see Bitcoin as only suitable for a portion of a small allocation to alternative assets, the company said, adding that it doesn’t see institutions carving out a separate allocation to Bitcoin in its current state.
However, this could change in the very near future. According to the report, if Bitcoin manages to maintain its historical growth rates, its current daily volume from spot markets of $4.3 billion could exceed the daily volume of all U.S. equities in less than 4 years.
Prediction for BTC’s spot volume growth in the next 6 years. (Source: CoinMetrics)
BTC would also take less than 5 years to exceed the daily volume of all U.S. bonds, which currently stand at $893 billion.
“All facets of BTC’s trading volume have experienced exponential growth and, if sustained, will grow to levels similar to major asset classes,” the company concluded in the report.
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