Mike Novogratz's Galaxy Digital is seeing near-record trading volumes amid bitcoin rally

Volatility made a big return to the crypto markets as bitcoin climbed past $11,000 apiece, with one of the most well-known trading desks in the space reporting a significant jump in activity.

The rise in bitcoin's price pushed trading volumes at Mike Novogratz's Galaxy Digital to near-record levels, Tim Plakas, who leads sales for Galaxy Digital Trading, told The Block in an email. 

"We’ve seen a strong increase in volumes through our desk since the start of the year as our institutional counterparty base has grown in size and sophistication," Plakas said. "In terms of the recent move higher, the uptick in volumes we’ve seen will put this month on track to be at record levels in-line with what we saw during the climb out of crypto winter back in spring 2019."

Indeed, trading desks are not the only market participants benefiting from the recent action. 

Derivative exchanges have also seen volumes surge over the past week. Open interest in Deribit's bitcoin options market hit a record high of $1.6 billion on Tuesday. In the futures market, open interest in CME's bitcoin futures product surged from $372 million on Monday to $730 million on Thursday, according to data from Skew. 

"This past week saw a near-perfect setup for a breakout of range-bound trading and a move above key resistance levels for both BTC and ETH," Plakas said. "The factors at play included a recent period of record low volatility with bullish setups for the two largest cryptos."

Plakas went on to say:

"Galaxy Digital's OTC desk saw the move start mid-last week on the OCC news for BTC, and then the ETH 2.0 test-net 'Medalla' news for ETH. At first, volumes weren’t especially convincing, but that changed this week with volumes coming back strong across spot, futures and options on lit venues — hitting highs not seen since the March sell-off, with the options market in particular seeing record volumes."

In Plakas' view, macro tailwinds — including headlines of a weakening dollar and growing concerns about central bank monetary policy — also played a role in pushing bitcoin to levels not seen since before the COVID-19 pandemic gripped global markets earlier this year.

As for ETH, Plakas tied its own impressive rally over the last week to developments "at the protocol level with DeFi and ETH 2.0 progress."

"These elements were coupled with crypto correlation to equities coming off all-time highs while increasing with Gold, and high-flying DeFi coins outperforming BTC & ETH which added to a frothy backdrop in terms of rotation risk (DeFi tokens > BTC/ETH)," he said.