Wintermute Sees 400% Surge in Crypto OTC Volumes in 2023

• Cryptocurrency Trading Volume in 2023: A Closer Look
• Wintermute's OTC Volume Growth
• Statements from Wintermute Group's CEO
• Liquidity in Cryptocurrency Trading
• The Impact of 'Alameda Gap'
• Challenges Faced by Binance

Cryptocurrency Trading Volume in 2023: A Closer Look

In 2023, the crypto trading volume experienced a significant slump, reaching its lowest level in several years. This downturn corresponded with a sharp decrease in activity across various exchanges during the so-called 'crypto winter'. However, this did not imply a reduction in trading activities.

Wintermute's OTC Volume Growth

According to a report by Wintermute, a prominent market maker and liquidity provider, its over-the-counter (OTC) volume increased by a staggering 400% throughout the year, as volumes began to shift from exchanges to OTC. Wintermute noted that in the first half of 2023, its OTC trading volume diminished, while the number of individual trades remained constant. In contrast, during the second half of the year, the number of unique trades increased sixfold to 29 million, and weekly OTC volume skyrocketed to $2 billion.

Statements from Wintermute Group's CEO

Evgeny Gaevoy, CEO and Co-Founder of Wintermute Group, commented on the findings in the report. He pointed out the challenging outlook for the industry brought about by developments at the end of 2022. Gaevoy highlighted the decrease in market activity, drying up of liquidity, and the shift of volumes from exchanges to OTC.

Liquidity in Cryptocurrency Trading

Liquidity in the context of cryptocurrency trading refers to the ease with which large orders can be executed without markedly impacting the market price. A lack of sufficient liquidity can likely lead to significant price alterations when making large trades. Throughout 2023, exchanges consistently struggled with this liquidity issue, prompting numerous large institutional traders to pivot to OTC desks.

The Impact of 'Alameda Gap'

Despite Bitcoin$42,260 -0.64%'s impressive rally of over 150% throughout the year, the market still grappled with liquidity issues, often referred to as the 'Alameda Gap'. This issue was highlighted by the 0.1% market depth on major exchanges crashing severely.

Challenges Faced by Binance

Binance, the world's largest crypto exchange, had a particularly tough time dealing with liquidity issues. The liquidity available in its order book decreased by 25% in November, further complicated by a $4 billion settlement with U.S. authorities and the subsequent resignation of its CEO, Changpeng 'CZ' Zhao.

Edited by Jonathan Stoker