With increasing speculation in the crypto community that cryptocurrency markets are on the cusp of the next major bull season, it can be easy to lose sight of the maturation that the crypto ecosystem has undergone to get to the present moment.

When comparing the current crypto markets against the climate preceding the previous bull run, many top markets have seen volume gains by a factor of multiple thousands, evidencing a significant expansion in market liquidity.

Daily BTC trade up 519 times since 2017

As of Feb. 15, 2017, Bitcoin (BTC) was the single-most traded crypto asset, having generated $89.76 million worth of trades over 24 hours. 12 months later, amid the fallout from the all-time highs posted during December 2017, BTC had seen a 100-time gain in trade activity, posting a 24-hour volume of $171.48 billion. By contrast, the market capitalization of BTC had grown by 10 times over the same period, highlighting the dramatic growth in liquidity relative to capitalization during the bull trend.

However, the ensuing bear trend saw Bitcoin trade activity shrink by one-third, with $6.09 billion worth of BTC changing hands during Feb. 15, 2019. The capitalization of BTC also saw a significant decline during 2018, having plummeted 62.9% in 12 months.

As of Feb. 19, 2020, BTC is the second-most traded crypto asset despite seeing a 667% gain in trade activity, with BTC pairings garnering $46.71 billion worth of trades over the past day. Over the past year, BTC has also seen its market capitalization grow by approximately 200%.

ETH trade volume consistently gains year-over-year

Three years ago, Ether (ETH) was the second-most traded crypto asset, with a daily volume of $18.46 million. As of Feb. 15, 2018, Ether became the third-most traded cryptocurrency despite a year-over-year increase in trade activity of 156 times, driving its daily volume up to $2.9 billion. During the same period, the market cap of ETH expanded by 78 times.

Since 2018, Ether has been generally ranked as the third-most traded crypto asset, despite being one of the few to have posted a year-over-year increase in trade volume as of mid-February 2019, with a gain of 4.2%. Despite the increase in market trade activity, Ether’s market capitalization had shrunk by 86% during the same year.

As of Feb. 19, 2020, the 24-hour volume of ETH had rebounded by 667% in one year, with $23.22 billion worth of Ether changing hands today. The expansion in trade activity far surpassed Ether’s growth in market cap over the same period, with ETH capitalization increasing by approximately 140%. In 36 months, ETH’s trade activity has increased by roughly 1,250 times.

XMR falls from top 20 crypto assets by volume

After being the third-most traded crypto asset with a daily volume of $4.81 million as of Feb. 15, 2017, Monero (XMR) saw the weakest 12-month gain in liquidity among the top six markets by trade activity.

As of Feb. 15, 2018, XMR pairings produced $85.77 million in daily volume, ranking Monero as the 20th-most traded crypto asset and seeing an increase of nearly 17 times. By contrast, XMR’s market cap grew by 24 times during the same period.

The 2018 bear market saw XMR’s trade volume decline by 39% in 12 months, with $52.42 million worth of Monero changing hands during Feb. 15, 2019 — ranking XMR as the 21st-most traded cryptocurrency. The same year saw Monero’s market cap fall by 83%.

Despite producing a relatively weaker recovery than other leading markets, XMR has seen a 140% gain in trade volume year-over-year, with Monero pairings having produced $129.99 million worth of trades during the past 24 hours. The XMR’s capitalization has also increased by 105% in 12 months and is currently the 14th-most traded crypto asset. XMR’s trade activity has increased by 14 times in three years.

LTC trade activity increases by 1,995 times

As of Feb. 15, 2017, Litecoin (LTC) was the fifth-most traded crypto asset with a 24-hour trade volume of $2.68 million. Litecoin saw the largest gain in trade activity during 2017, ranking fourth by volume with $2.09 billion worth of LTC changing hands 12 months later following an increase by 776 times in trade. The total capitalization of Litecoin also gained by nearly 65 times during the same period.

LTC suffered the heaviest decline in volume among the top markets during the 2018 bear season, with the fourth-most traded crypto asset seeing a 50% drop in trade activity to post a 24-hour volume of $1.04 billion as of Feb. 15, 2019.

LTC still ranks fourth by trade activity, with Litecoin pairings producing $5.57 billion worth of trades in the last 24-hours — with a year-over-year volume increase of 435%. Litecoin’s market cap has also grown by 100% over the past 12 months.

USDT trade skyrockets in three years

As of Feb. 15, 2017, Tether (USDT) was the sixth-most traded crypto asset with a 24-hour volume of $1.65 million. One year later, Tether had seen a volume increase by 1,985 times, then Tether became the second-most traded cryptocurrency with a daily volume of $3.28 billion. The same year saw Tether’s market cap grow 100 times.

Tether’s volume continued to grow despite the 2018 bear trend, with USDT pairings producing almost $5.02 billion worth of trades as of Feb. 15, 2019 — a 12-month increase of 52.6% alongside a 9% decline in capitalization.

Currently, USDT has dethroned BTC as the most-traded crypto asset, having generated $56.47 billion worth of trades in the last 24 hours, an increase of 10 times. Tether’s market cap has also grown by roughly 130% over the past year.

Tether volume increased after Chinese crypto crackdown

David Waslen, CEO and co-founder of HedgeTrade, a blockchain-powered financial application for social trading, attributes the enormous growth in USDT’s volume to China’s 2018 cryptocurrency crackdown.

Waslen told Cointelegraph that the use of stablecoins became the preferred strategy for Chinese investors seeking to move money in and out of the cryptocurrency markets following the introduction of prohibitive policies with regards to crypto by the Chinese central government. Waslen stated: “Since the ban took effect on crypto exchanges, Tether has been used in China mainly as the on/off ramp between cryptocurrencies and more stable assets.” He went on to add:

“After the ban against fiat on-ramps for exchanges took effect in August of 2018, Chinese exchanges where USDT was used extensively saw continued growth — despite their losing access to banking services. USDT reacted to the ban by hitting several major milestones over the next year or so.”

Waslen also notes that China’s OTC markets facilitate a significant number of USDT trades that are not represented in Coinmarketcap’s data, stating: “Now that the stablecoin has become so widely used, we’re seeing USDT brokers creating a very lucrative niche with cryptocurrency companies — especially those that have fiat liquidity.”

Looking forward, Waslen expects that the trade volumes for USDT and other fiat-pegged stablecoins will continue to increase in the future, particularly in jurisdictions that maintain strict capital controls.

Terry Culver, the chief executive of blockchain venture capital and hedge fund management firm Digital Finance Group U.S., argues that BTC has seen reduced volume volatility as a result of an increased use as a store of value amid a rise of altcoin speculation. “Other top digital assets have seen considerable increases in volume year-over-year, punctuated by extreme highs and lows along the way.”

Culver suggests that USDT trade volume should not be compared alongside that of other cryptocurrencies, suggesting that much of the reported Tether volume is fake:

“I think it’s helpful to exclude USDT as an appropriate comparable. Much of the volume is fake. The volume that is real serves a very different purpose from other cryptos. It is a short term (traders holding it for minutes) medium of exchange between fiat and crypto.”

Experts challenge Coinmarketcap volume data

The CEO of the Dash Core Group, Ryan Taylor, believes that Coinmarketcap’s volume data cannot be trusted: “In my opinion, it is unlikely that the reported numbers are accurate.” He went on to explain:

“Exchanges are heavily incentivized to inflate their trading volume to attract users, and unfortunately, many of the less credible exchanges do just that. If you look at exchanges that appear to report accurate volumes, 2019 appeared to be relatively less active than 2018, with the exception of higher volumes in the second quarter of 2019.”

However, Taylor notes that Coinmarketcap has responded to the issue of exchanges inflating reported volume by “attempting to shift to other metrics for liquidity that are more difficult to manipulate.”

Haohan Xu, the CEO and founder of distributed digital asset marketplace Apifiny, believes that Coinmarketcap’s data does not accurately represent the volume distribution of the cryptocurrency ecosystem because it does not include the liquidity present in the crypto derivatives markets:

“Based on the market data we have been monitoring, the transaction volume of leading crypto assets between the year of 2018 and 2019 did not see any growth in the market, unless transaction volume for derivatives is taken into account.”

Xu asserts that cryptocurrency derivatives saw significant growth during 2019, which most likely led to a significant increase in the transaction volume of leading crypto assets, more so in the second half of the year. Xu expects crypto trade volumes to grow at a faster pace in the coming years, predicting that 2021 will see trade volumes that significantly surpass the trade activity of 2020.

By contrast, the COO of cryptocurrency payments platform Crypto.com, Eric Anziani, identified a surge in trade activity during the middle of 2019 before market activity slowed toward the end of the year.

“In 2018, overall adjusted industry trading volume dropped significantly as the market entered a prolonged bear period. Retail volume dried up first followed by institutions. In 2019, volume recovered across the board and increased up to 5x in the months of May/June 2019 compared to the same time in 2018, riding on the BTC price rally culminating in July 2019. We did observe a slowdown of global trading activity towards the end of 2019.”

However, Anziani adds that early 2020 has seen “notable upward volume trend” and bullish market sentiment “both from retail and institutional users.”