The crypto currency market has grown to over $2trillion in size with various digital assets now being held in over 70million wallets. The turnover (especially in the larger crypto currencies) is particularly impressive, where it is not uncommon to observe 20% - 40% of the value of a crypto being bought and sold in a day whereby demonstrating the liquidity of these assets.
The volume of crypto currencies being traded has been increasing, as can be seen from the chart below, with the start of 2021 proving to be especially active for this asset class. In March 2021 alone, Bitcoin miners earnt a staggering $1.5 billion in fees, while Ethereum miners had earnt $1billion in February 2021.
Volume of Cryptocurrencies traded per month (spot v derivatives)
Source: Cryptocompare
The DeFi sector is now over $112billion in value and in the last 24 hours has turned over $16billion Meanwhile, we have witnessed an explosion of interest in Non-Fungible Tokens, in the last 30 days there has been $103million turnover from over 573,680 tokens. As the image below shows the amount of money that some NFTs attract is likely to stimulate further interest from artist and other owners of IP.
Size of the NFT market
Source: Nonfungible.com
To give some context to these digital asset numbers the value of equities traded in the US in March 2021 was $656billion and the daily foreign exchange volume is approximately $6trillion a day.
Possibly the most impressive statistic for crypto currencies is the daily turnover enjoyed by a number of digital assets. It is not uncommon to have 20% - 50% daily turnover (especially for some of the larger crypto currencies) and, in some cases, even more of their capitalisation being bought and sold within a 24-hour period. These daily turnover figures illustrate the liquidity and interest of these assets and would be the envy of many small and mid-cap equities being traded on traditional stock exchanges, where liquidity remains a key challenge for traders and market makers. One possible explanation is that crypto currencies can be traded globally enabling the generation of greater liquidity, whereas traditional stock exchanges (certainly, historically) represent the trading with a particular country.
IT stocks daily turnover v Crypto daily turnover
*as at 8th April 2021
The interest in digital assets keeps expanding by the amount of funds under management in various pooled/collective vehicles, as can be seen below.
Funds under management in Investment products
Source: Cryptocompare
Given the size of the various digital assets it is not difficult to see why these assets are attracting so much interest from traditional financial institutions. The interest is likely to receive a further boost since Coinbase has now announced that it is to be listed on the 14th of April in the US at a valuation of $100billion – although some feel this is too high! It will be interesting to see if the interest in digital assets remains, as and when we see a fall in traditional equity markets (which is long overdue), given we have not seen a substantial fall in equity prices now for over 10 years.
