Wintermute OTC Annual Report: Trading Volume Grows Fourfold in Second Half, TradFi Revival Resumes
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Wintermute OTC Annual Report: Trading Volume Grows Fourfold in Second Half, TradFi Revival Resumes
Besides BTC and ETH, payment-related assets are the largest category in terms of trading volume, with TradFi shifting more transactions to altcoins.
Navigating Web3 tides with focused insightsAuthor: Wintermute
Translation: Felix, PANews
The crypto market in 2023 experienced a series of highs and lows. It began with a rebound at the start of the year, followed by mid-year volatility, and ultimately ended on an optimistic note—driven by expectations around the approval of spot ETFs. As market activity slowed, industry narratives shifted toward "Build." Last year, Wintermute focused on expanding its OTC business and developing new products.
Key milestones include Wintermute Asia’s integration with CME, major upgrades to its over-the-counter (OTC) options offering, and ongoing development of additional derivatives. Since launching in November last year, Wintermute Asia has achieved $210 million in options trading volume, with exponentially growing demand for the product from counterparties.
As we enter the new year, Wintermute shares updates on its business and reflects on some trends observed through OTC trading in 2023.
With volumes shifting off-exchange, OTC trading volume grew over 400% in H2
Despite a sluggish market in 2023, all of Wintermute’s verticals continued to grow. In the spot market, while on-exchange trading volume declined by approximately 13% from H1 to H2, OTC trading volume surged over 400% during the same period.
Although OTC transaction counts in H1 2023 were comparable to those in H2 2022, OTC volumes initially declined in early 2023. This suggests that despite smaller trade sizes, counterparties remained committed to crypto trading strategies. As the market recovered in the second half of 2023, trading activity increased significantly, with transaction counts growing more than sixfold—exceeding 29 million trades. During this period, weekly OTC volumes peaked at over $2 billion.
In 2023, Wintermute provided OTC trading for 206 assets and 495 trading pairs. Below are the overall asset trading trends observed by Wintermute.
Payment-related assets ranked as the most traded crypto category after BTC and ETH
Excluding BTC and ETH—which consistently ranked first and second across all periods—payment-related assets had the highest trading volume and market share. Their market share rose from 13% in H2 2022 to 20% in H2 2023.
This growth was partly driven by the outcome of the SEC vs. Ripple case, which boosted XRP and other payment-focused assets.
Other categories active in H2 2023 included Meme, DeFi, and other smart contract platforms. These maintained strong market shares, accounting for 37% in H2 2022 and 38% in H2 2023.
L1 and L2 trading volumes continued to grow, led by ETH and MATIC
L1 asset OTC volumes followed the general OTC trend—declining by about half from H2 2022 to H1 2023, then surging 350% in H2 2023. Ethereum led with the highest volume, capturing 68% of the market share.
Notably, however, Ethereum’s market dominance gradually declined from H2 2022 to H2 2023.
In H2 2023, Solana, Avalanche, Cardano, and Polkadot ranked among the top five in trading volume. Compared to Ethereum, most other L1 assets performed strongly in H1 2023, with increasing volumes—Polkadot being the exception, showing a slight decline.
Compared to L1s, L2 trading activity was roughly 30 times lower, with the largest declines seen in Polygon, Arbitrum, and Optimism. However, overall L2 trading activity continued to grow, rising approximately 160% from H2 2022 to H2 2023.
DeFi remains strong, with slight market share growth but significant increase in nominal trading volume
While DeFi's nominal trading volume increased about sevenfold from H2 2022 to H2 2023, its market share dipped from 16% to 11%. Within DeFi, Yield Farming accounted for the largest share of trading volume, followed by oracle, lending, and DEX assets.
Yield Farming maintained strong dominance throughout 2023, representing around 35% of total DeFi trading volume, with nominal volume growing more than ninefold during the same period.
From H2 2022 to H1 2023, oracle-related assets saw both trading volume (down ~30%) and market share (from 11% to 8%) slightly decline, but rebounded in H2 2023 to account for 26% of total DeFi volume—largely at the expense of DEX assets. Despite DEX assets’ nominal volume growing over 3.4-fold, their share of DeFi volume dropped sharply—from 31% to 13.5%.
From H1 to H2 2023, lending-related assets increased their market share by 10 percentage points (from 13% to 23%).
From H2 2022 to H1 2023, derivative assets saw nominal volume initially surge tenfold, with market share rising from 0.6% to 6.9%. However, by H2 2023, derivative assets' market share had fallen back to 0.5%.
TradFi re-emerges, shifting toward altcoin trading
In terms of overall trading volume between Crypto Native and TradFi participants, the market share ratio was 81%:19% in H2 2022. By H2 2023, TradFi reappeared, adjusting the ratio to 72%:28%. This indicates renewed interest from traditional finance players in the second half of 2023, a trend expected to continue into 2024.
Across each period, BTC and ETH dominated trading volumes for both TradFi and Crypto Native counterparties.
However, deeper analysis reveals interesting shifts. In H2 2022, BTC and ETH clearly dominated both counterparty types: Crypto Natives held a combined 82.7% market share (BTC 44.9%, ETH 32.8%), while TradFi reached 94% (BTC 62%, ETH 32%).
This changed in H2 2023, with both groups seeing over a 15% drop in BTC and ETH market share. Crypto Natives accounted for 65.3% (BTC 49.9%, ETH 15.4%), while TradFi saw a sharper decline to 72.1% (BTC 50.3%, ETH 21.8%). The proportional rise in non-Bitcoin, non-Ethereum trading volume indicates growing interest in altcoins.
These trends suggest that not only has TradFi interest re-emerged, but it is also becoming more diversified.
Beyond BTC and ETH, Solana and payment-related assets saw the fastest volume growth among Crypto Native counterparties. In contrast, for TradFi counterparties, DeFi-related assets grew the fastest.
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