In 2024, a remarkable transformation occurred within the cryptocurrency over-the-counter (OTC) market, highlighted by an extraordinary increase in trading volumes, which more than doubled due to robust institutional adoption and favorable market backdrop. According to a thorough analysis of approximately 4 million spot trades, OTC trading volume rose by 106% compared to the previous year, with transactions involving stablecoins experiencing a striking increase of 147%.
The evolution of institutional crypto trading was particularly notable in 2024, culminating in Bitcoin’s ascension beyond $100,000 during December. This achievement coincided with the successful introduction of Bitcoin and Ethereum exchange-traded funds (ETFs), a development that significantly influenced market dynamics. Notably, the influx of capital into Bitcoin ETFs in the U.S. surpassed that of gold ETFs, marking a historic milestone for product launches in financial markets.
As we moved through the year, traditional financial institutions shifted their perspectives on digital assets, transitioning from skepticism to a more accepting stance. The fourth quarter saw heightened trading activity, propelled by positive post-election sentiment across all major cryptocurrencies. Bitcoin trading exhibited an impressive 80% increase year-over-year, while Ethereum trading volumes surged by 187%, with stablecoin transactions also escalating by an impressive 191%.
Each quarter of 2024 showcased unique growth dynamics, with the year’s strongest performance observed in the fourth quarter, where total OTC volumes achieved a substantial 177% year-over-year growth. The second quarter also benefitted from the promising Bitcoin ETF launches, recording a growth rate of 110%. The first and third quarters followed with increases of 80% and 78%, respectively.
Furthermore, the growth of stablecoins underscored their emerging role as a vital connective tissue bridging traditional and digital finance. Notably, stablecoin transaction volumes surpassed those of Visa, demonstrating their essential function in facilitating global business operations and highlighting the deficiencies of conventional banking systems in addressing contemporary market demands.
The institutional interest in altcoins witnessed a significant rise, with altcoins’ market share expanding to 29% of total trading volume, up from 13% in the previous year. Solana distinguished itself as a remarkable performer, showcasing a ninefold increase in trading activity, with a staggering 43-fold increase occurring solely in the fourth quarter. Litecoin also maintained its popularity among institutional traders, recording a 149% year-over-year growth in trading activity.
Looking ahead, the cryptocurrency market structure is projected to experience further evolution in 2025, driven by emerging key trends. Prospective implementations of crypto-backed loans by institutions could unveil new investment avenues, while the trend towards tokenizing traditional assets is expected to gain momentum, which might transform global trading strategies to accommodate 24/7 trading and enhance liquidity for assets previously viewed as illiquid.
The trajectory of market structures appears to be strengthening in light of anticipated regulatory advancements, which will facilitate more balanced risk distributions and expand trading diversification. Several new companies are likely to emerge in major financial hubs such as Singapore, the UAE, London, and various cities across Europe, especially as the Markets in Crypto-Assets (MiCA) regulation takes form.
As regulatory frameworks unfold, European markets may face particular scrutiny, presenting potential challenges for smaller cryptocurrency exchanges. However, these developments may also catalyze innovation within broker-dealer business models and lead to accelerated adoption of advanced technological solutions in the cryptocurrency sector.
Overall, 2024 marked a pivotal year in the cryptocurrency market, characterized by significant growth in trading activities across various segments, particularly within institutional investment and the adoption of innovative financial instruments like ETFs and stablecoins. The positive trends observed promise to shape the future landscape of digital finance as it continues to evolve and grow.