Bitcoin surge stokes huge volumes for Aussie crypto exchanges
Key Points
- Trading volumes signal Australians are piling back into crypto
- Local exchanges have benefit from Binance’s legal headaches
- Bitcoin has led a huge rally in crypto assets in 2023
Australian crypto exchanges booked a windfall in November as frenzied speculation prompted traders to pile into bitcoin, pushing the world’s largest digital currency above $US40,000 for the first time in two years.
Controversy surrounding the founder of Binance Changpeng Zhao, who last month pleaded guilty to money laundering charges, has also boosted local inflows in Australia, as nervous investors abandon the world’s biggest cryptocurrency exchange in favour of locally regulated operators.
Sydney-based exchange Independent Reserve recorded its best month of trading volumes in two years in November, as trades topped $500 million – up 50 per cent from a year earlier.
Hope of a bitcoin ETF being approved in January including from Cathie Wood’s ARK Investment has helped fuel a crypto rally. Bloomberg
Bitcoin has surged 22 per cent since the start of November to$US43,382 on Friday, bolstered by hype around the potential for regulators to approve bitcoin exchange funds (ETF) in January 2024.
“I can definitely say optimism’s returned to crypto markets,” said Adrian Przelozny, founder and chief executive of Independent Reserve. “People are bullish, and the positive sentiment is driven by the halving in the bitcoin supply around next April as a price support for bitcoin.”
The so-called bitcoin halving reduces the number of tokens that bitcoin miners receive to help cap supply at 21 million tokens. In each of the last three events, the coin hit a record.
According to CoinMarketCap, cryptocurrency markets recorded a total market value of $US1.6 trillion ($2.4 trillion) on Friday, with bitcoin reaching a market cap of $US847.2 billion on a 24-hour trading volume of $US27.7 billion.
The oldest cryptocurrency has now rocketed 175 per cent in 2023 and is on track to be the best-performing major asset this year, thumping the returns on traditional assets such as stocks, gold and bonds.
The renewed appetite has been largely attributed to expectations the US Securities Exchange Commission will approve a bitcoin ETF in January, which will pave the way for Wall Street players such as BlackRock and Cathie Wood’s Ark Invest to market the funds to massive swaths of new investors.
Dumping Binance
Caroline Bowler, chief executive of ASIC-regulated exchange BTC Markets, said Binance customers had withdrawn more than $US2.3 billion from the troubled exchange in seven days after the founder pleaded guilty to US charges that included allowing transactions with terrorist group Hamas.
Mr Zhao’s guilty plea also followed the conviction of Sam Bankman-Fried, the CEO of now collapsed cryptocurrency exchange FTX, in a high-profile trial in October.
BTC Markets CEO Caroline Bowler said the exchange trousered $6.5 million of inflows just from Binance clients in the week following its November 21 plea deal. Oscar Colman
Ms Bowler said BTC pocketed $6.5 million of inflows from Binance users alone between November 21 to November 28, with total crypto inflows to the exchange soaring 122 per cent on the prior comparable week in 2022.
“People aren’t happy about what they heard from Binance,” said Ms Bowler. “The Australian exchanges are now viewed by Australian investors as a flight to safety in times of uncertainty. We saw inflows in May of last year when Terra Luna collapsed and people are cautious after what happened with FTX.”
She added that the federal government’s proposal for cryptocurrency exchanges to obtain an Australian Financial Services License could make the sector more appealing to institutional investors and foster mainstream adoption.
Ms Bowler said the strong inflows had extended into December to elongate a steady upswing in crypto trading volumes and markets after a horror end to 2022, bookmarked by the collapse of FTX.
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