In a remarkable turn of events, Bitcoin has set a new record in January 2024, with on-chain trading volumes surpassing an astonishing $1.2 trillion. This surge marks the highest levels since September 2022, reflecting a substantial shift in market dynamics.

January: A Month of Milestones

Throughout January, the volumes of dollars traded on the Bitcoin blockchain soared, eclipsing the previous month’s total by $200 billion. In December 2023, the volumes had settled at a substantial $1 trillion, emphasizing the remarkable growth in just a span of one month.

Comparatively, September 2023 saw volumes languishing below $600 billion, highlighting the unprecedented leap witnessed in January 2024. This surge not only outpaced recent months but also outstripped November 2022 when volumes reached the $1.2 trillion mark but subsequently plummeted.

A Rollercoaster of Volumes: 2022-2023 Recap

Reflecting on the past, November 2022 recorded volumes similar to January 2024 but witnessed a subsequent decline. In December of the same year, volumes fell below $500 billion, remaining under $600 billion until February 2023.

March 2023 witnessed a modest recovery as volumes surpassed $700 billion, holding steady until August. September 2023 witnessed a brief dip below $600 billion, but by October, volumes surged to almost $800 billion. November and December of 2023 saw volumes exceeding $900 billion and eventually crossing the $1 trillion mark.

Interestingly, these levels aligned with those observed during the notable bull run of November 2020. The volumes in December 2023 and January 2024 have essentially reverted to pre-2021 bubble levels, signaling a return to a more stabilized market.

Navigating Historical Turbulence

The journey to this point began in November 2020, coinciding with the commencement of the latest major bull run in the crypto markets, following the halving in May 2020. The bull run unfolded in two phases, concluding in November 2021, maintaining consistently high trading volumes throughout the year.

However, the bubble burst in the latter half of November 2021, leading to a gradual decline in on-chain volumes. May 2022 witnessed a significant collapse, compounded by the Terra/Luna ecosystem’s implosion, followed by another downturn in June due to the failure of Celsius. A further collapse transpired in November 2022 with the bankruptcy of FTX.

January 2023 marked a turning point, witnessing a substantial rebound in Bitcoin’s price. The subsequent months saw increased volatility, including several bank failures in the USA in March, setting the stage for a market recovery from October 2023.

December 2023 and January 2024: Unraveling the Volumes

The surge in December 2023 was influenced by expectations for the approval of Bitcoin spot ETFs, with January 2024 only partially affected as they received approval on January 10th. Unlike December, the on-chain trading volumes in January were not driven solely by the increase in BTC value but by a tangible rise in the average transaction value.

With the introduction of ETFs to traditional markets, the daily average value of BTC traded on-chain experienced a notable uptick. In December 2023, despite BTC prices exceeding $40,000, the average per on-chain transaction seldom surpassed $60,000. However, from January 17th onwards, it frequently exceeded $100,000, peaking at nearly $174,000 on January 12th, following the ETFs’ market launch.

Analyzing Transaction Costs

To comprehend this dynamic shift, it’s crucial to examine the average transaction cost. In November 2023, daily costs for a single on-chain Bitcoin transaction often remained below $10. December witnessed a spike due to increased transactions, with daily averages surpassing $20 and occasionally exceeding $30.

Contrastingly, January 2024 saw a reduction in daily transactions to below 500,000, leading to a decline in average transaction costs to below $10. Despite fewer transactions compared to December, the increase in the average value per transaction fueled an overall growth in traded volumes.

While January did witness a decrease in fees compared to the exceptionally high levels of December, they still remain elevated, albeit not at record-breaking levels.

Conclusion: A Resilient Crypto Market

In conclusion, the surge in Bitcoin trading volumes in January 2024 showcases the resilience and adaptability of the crypto market. With a unique interplay of market dynamics, ETF launches, and shifting transaction values, Bitcoin continues to captivate the financial landscape, setting the stage for a dynamic and intriguing year ahead.