The on-chain Bitcoin trading volumes in January were at a record high: it has been since September 2022 that they haven’t been this high.
In total, during the month, the volumes in dollars traded on the Bitcoin blockchain have exceeded 1.2 trillion dollars, while for example in December they had stopped at one trillion.
Even in September 2023 they had been below 600 billion.
The boom in Bitcoin volumes in January
Even in November 2022, they had been around 1.2 trillion, but later they had dropped significantly.
In December of the same year, in fact, they had fallen below 500 billion, and had remained below 600 billion until February 2023.
There was a small recovery in March, when they rose above 700 billion and remained more or less there until August.
In September 2023, there was a brief return below 600 billion, but by October they had jumped to almost 800. In November, they were almost 900 billion, and finally in December they returned above one trillion.
These levels are in line with those of November 2020, when the last major bull run began. Interestingly, they are also in line with those of December 2017, which was the month of the peak of the previous bull run.
However, it has nothing to do with the absolute monthly peaks of November 2021, which is the month of the current ATH of the BTC price, when it even exceeded 8 trillion dollars.
However, if we exclude the speculative bubble of 2021, which started at the end of 2020 and completely ended only in November 2022 with the failure of FTX, the on-chain volumes of December 2023 and January 2024 of Bitcoin have returned to pre-bubble levels of November 2020.
The events of this period
The historical period just described began in November 2020, precisely with the start of the latest major bull run in the crypto markets, six months after the last halving (in May 2020).
Although the major bull run occurred in two phases, the first ending in April 2021 and the second in November 2021, that year the trading volumes of BTC in dollars on the Bitcoin blockchain remained consistently high, reaching a historical peak in the month of the price peak.
The bubble began to burst in the second half of November, and in December 2021, on-chain volumes also started to decrease.
The first real collapse occurred in May 2022, with the implosion of the Terra/Luna ecosystem, followed by another drop in June due to the failure of Celsius.
Another collapse occurred in November of the same year with the bankruptcy of FTX.
However, starting from January 2023 there was a real and significant rebound in the price of Bitcoin, and in March of last year there were several bank failures in the USA that also brought a lot of volatility to the Bitcoin market.
However, it was from the end of October 2023 that the crypto markets started to recover, with a new small bull run that brought the price of BTC above $40,000 for the first time since May 2022.
December and January: Bitcoin volumes
Note that the increase in December 2023 was influenced by expectations for the approval of Bitcoin spot ETFs, but January 2024 was only partially affected, as they were approved on January 10th.
To further increase on-chain trading volumes in January, it was not the increase in the value of BTC, as in December, but a real increase in the average transaction value.
In other words, with the landing on traditional markets of ETFs, the average number of BTC traded on-chain every day has increased.
In December 2023, when the price was already above $40,000, the average value per single on-chain transaction rarely exceeded $60,000, but starting from January 17th, it often exceeded $100,000.
From this point of view, the peak occurred on January 12th, the day following the launch of the new ETFs on the markets, with an average on-chain transaction value of almost $174,000. This is certainly due to a high market value of BTC, but also and above all to a strong increase in BTC moved on-chain.
The problem of fees
To better understand this dynamic, it is also worth examining the average transaction cost.
In November 2023, the average daily cost for a single on-chain Bitcoin transaction often remained below $10.
In December, this number skyrocketed due to the boom in transactions. Despite an average daily of over 500,000 transactions recorded on the Bitcoin blockchain, the average cost per transaction often exceeded $20, and even surpassed $30 in some cases.
In January, however, the number of average daily transactions fell below 500,000, with the average cost per transaction often dropping below $10.
So in January there were fewer transactions recorded on the Bitcoin blockchain compared to December, and this has significantly reduced the cost as well. However, despite the market value of BTC not increasing significantly, the traded volumes have still grown because the average value of individual transactions has increased.
In fact, the major issue of excessively high fees in December has partially subsided, returning to November levels. They are still high levels, but not record-breaking.
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