Crypto trading volumes decline for first time since September 2023

U.S. macroeconomic factors and geopolitical turmoil seeped into crypto sentiment last month, resulting in a volume pullback not seen in over 30 weeks. 

CCData analytics showed that spot trading volumes on cryptocurrency centralized exchanges (CEX), like Binance and Coinbase, plummeted by 32.6% last month as a broad correction swept through market sectors. 

Spot trading volume dropped to $2 trillion for the first time since September last year. Trading volumes for derivative tokens also fell to a seven-month low of $4.5 trillion, marking a 26.1% decline. Crypto’s largest CEX Binance lost market share as trading activity retraced from highs recorded earlier this year. Due to a 4% drop, the platform’s command over digital asset trading reduced to 33.8%.

According to the data provider, the trend reversal may be attributed to a historical pattern common after Bitcoin (BTC) halvings. Last month, a change went live that cut the amount of newly mined tokens by 50%, slashing revenue for Bitcoin miners and bolstering BTC scarcity. 

CCData researcher Jacob Joseph wrote that CEX trading cooled off following the two previous halvings. The analyst further opined that ongoing inflation concerns in the U.S. shook market confidence, as investors remain skeptical regarding rate hikes.

“The higher-than-anticipated CPI inflation data and the escalation in the geopolitical tension in the Middle East have pushed some uncertainty and fear into the market. This coincides with the negative net flows from the spot Bitcoin ETFs, driving the price of major crypto assets to their range lows.”

Jacob Joseph, CCData researcher

Earlier this year, the U.S. SEC’s approval of spot Bitcoin ETFs solidified bullish sentiment and skyrocketed crypto prices to all-time highs (ATH). Bitcoin broke its previous ATH of $69,000 from the peak in 2021, setting a new record of over $73,000 in March. 

Wall Street leaders like BlackRock and Fidelity amassed over $10 billion in assets under management within weeks of launching, smashing records, but outflows have persisted in recent weeks. 

Although the general market has seemingly entered a post-halving lull and spot BTC ETFs struggled to woo new liquidity, Palisade co-founder Manthan Dave told crypto.news that prices would be much higher at the year’s close. 

The expert also believes that spot Ethereum ETFs, if approved, could attract more capital into crypto markets and offer an alternative to Bitcoin-underpinned vehicles. 

Spot bitcoin ETFs are a game-changer. In the long term, they will raise confidence in crypto and reduce the overall market’s volatility. What happens when the Ethereum ETF launches remains to be seen. It will certainly bring new capital as Ethereum is more “green” than bitcoin. But it is also likely to draw capital out of the bitcoin ETF as investors will seek to diversify.

Looking at what’s on the horizon, it is likely that we will see bitcoin teasing $100,000 by the end of this year.

Manthan Dave, Palisade co-founder