Private trading of crypto assets will increase by 400% in 2023: market maker Wintermute reports | CoinDesk JAPAN

Crypto asset (virtual currency) trading volume in 2023 was the lowest level in several years, and crypto asset exchanges experienced a sharp decline in transactions during the “crypto asset winter,” but this was due to a decline in trading itself. It doesn’t mean anything.

Over-the-counter (OTC) trading volume has increased by 400% in one year as trades have moved outside of exchanges, according to a new report from market maker and liquidity provider Wintermute.

According to Wintermute, OTC trading volume declined in the first half of 2023, but the number of individual trades remained flat. However, in the second half of the year, the number of individual transactions increased sixfold to 29 million, and the weekly OTC trading volume reached $2 billion (approximately 290 billion yen, equivalent to 1 dollar = 145 yen).

OTC trading volume in 2023. (Wintermute)

“Market trends at the end of 2022 left a bleak outlook for the industry as a whole, with markets slowing, liquidity drying up and we seeing trading starting to move from exchanges to OTC,” Wintermute said.・Evgeny Gaevoy, CEO and co-founder of Wintermute Group, said in the report.

Liquidity in crypto asset trading refers to how easily large orders can be executed without significantly impacting the market price. Without sufficient liquidity, large trades are likely to cause price fluctuations.

Lack of liquidity will be a persistent challenge for exchanges throughout 2023, leading many large institutional investors to move to OTC.

CoinDesk reported that even as Bitcoin rose more than 150% over the course of the year, the market was plagued by the “Alameda Gap” of liquidity.

There was a significant decline in liquidity as measured by 0.1% market depth on major exchanges. (Kaiko)

Binance, the world’s largest crypto exchange, has had a particularly difficult time regarding liquidity. In November, liquidity fell 25% due to a $4 billion settlement with US authorities and the subsequent resignation of CEO Changpeng Zhao, also known as CZ.

｜Translation: CoinDesk JAPAN
｜Edited by: Toshihiko Inoue
｜Image: Wintermute
｜Original text: Crypto OTC Volumes on Wintermute Soared 400% in 2023