Crypto Trading Activity Experiences First Downturn Since September 2023

Last month, a blend of U.S. economic concerns and escalating geopolitical conflicts led to a downturn in cryptocurrency market sentiment, resulting in the steepest drop in trading volumes seen in over seven months. 

Statistics from CCData analytics indicated that there was a significant contraction in spot trading volumes on key cryptocurrency centralized exchanges (CEX) such as Binance and Coinbase, which fell by 32.6%, as a corrective wave affected various market sectors. 

According to reports, spot trading volume plummeted below the $2 trillion mark for the first time since the previous September. Similarly, trading volumes across derivatives also experienced a downturn, reaching a low of $4.5 trillion in seven months, down by 26.1%. In the wake of these developments, Binance, the dominant force in crypto trading, witnessed a dip in market share due to a 4% decline, reducing its hold on digital asset trading to 33.8%.

The provider suggests this retrenchment trend could be linked to a historically observed pattern following Bitcoin (BTC) halving events. The recent halving, reducing the reward for mining new tokens by half, potentially heightened Bitcoin’s scarcity while concurrently impacting miner profits.

Research conducted by CCData’s Jacob Joseph suggests that trading on CEX platforms has historically slowed following the two preceding halvings. Joseph also contended that inflation anxieties in the U.S. are dampening investor enthusiasm due to trepidation over potential interest rate hikes.

“Unexpectedly high CPI inflation data and increased geopolitical tensions in the Middle East have infused a sense of uncertainty and apprehension into the market. These factors coincide with negative net shifts in spot Bitcoin ETFs, pushing the prices of leading crypto assets towards their lower thresholds.”

Jacob Joseph, CCData researcher

Earlier in the year, the U.S. SEC’s sanction of spot Bitcoin ETFs fueled a bullish surge in cryptocurrency prices, pushing Bitcoin to a new pinnacle above $73,000 in March, superseding its prior all-time high of $69,000 achieved in 2021.

Institutional giants such as BlackRock and Fidelity quickly accumulated assets exceeding $10 billion in a short time frame, despite recent outflows. 

Despite the post-halving slowdown and spot BTC ETFs facing challenges in attracting fresh liquidity, Manthan Dave, co-founder of Palisade, informed crypto.news of his expectation that Bitcoin’s value would rise substantially by the year-end. 

Dave also posits that the introduction of spot Ethereum ETFs, if authorized, could infuse additional capital into the crypto sphere, providing a complement to Bitcoin-centric investment products. 

Spot bitcoin ETFs are transformative for investor confidence in cryptocurrencies, potentially smoothing market volatility over time. The potential launch of an Ethereum ETF is intriguing; it may attract fresh investment due to Ethereum’s eco-friendly profile and could also divert funds from bitcoin ETFs as investors seek diversification.

Anticipating future trends, it seems plausible that bitcoin could flirt with the $100,000 mark by this year’s end.

Manthan Dave, Palisade co-founder