Cryptocurrency Trading Activity Dips by 64% Over the Last Week – An Analysis of the Sudden Decline

Entering the previous week, the sentiment in the cryptocurrency market was relatively buoyant, with chatter among investors about a potential Bitcoin rally for the holiday season. Despite an ambitious surge towards the $100,000 milestone on Christmas, the uptrend was short-lived as bearish pressures quickly regained dominance.

This pattern wasn’t unique to Bitcoin; it was replicated across other major cryptocurrencies such as Ethereum, Solana, and the surging XRP, signaling a broad downturn in the digital asset space. This bearish atmosphere casts a shadow of doubt as the eventful year of 2024 approaches its end.

The Dip in Trading Activity

A recent update from Santiment on platform X revealed telling trends within the crypto space as 2024 nears completion. The blockchain intelligence firm pointed out a noticeable decrease in market trading volumes across various segments of cryptocurrencies.

According to Santiment, trading volumes saw a 64% reduction in the past week, with certain categories like AI/Big Data and meme-based cryptocurrencies hitting new lows for the week. This decline in trading activity is a stark contrast to the recent positive performance, especially considering Bitcoin’s all-time high of $108,135 just the week before.

Moreover, Santiment suggested that the drop in trading volume during the festive period should have been expected, particularly for speculative alternative coins. The firm cites seasonal slowing, with traders settling their yearly financial affairs, as a reason behind the quieter final December week.

In the meantime, an analyst going by Grizzly from Quicktake noted that the Coinbase Premium Index, which compares the price differences between Coinbase Pro (USD pair) and Binance (USDT pair), is also witnessing a reduction. Grizzly attributed this decrease to reduced active market participation during the holiday season and limited liquidity.

Source: Santiment/X

Nevertheless, if large investors maintain their accumulation patterns, Santiment anticipates the potential for an unexpected market surge before the end of 2024, despite the current retail disengagement.

Overview of Market Capitalization

The overall market cap for cryptocurrencies is currently around $3.43 trillion, reflecting a dip of 2.2% over the last day. However, with the year-to-date market cap showing an increase of over 100%, 2024 has undeniably marked a period of significant growth for the sector.

The crypto market cap on the daily timeframe | Source: TOTAL chart on TradingView

Featured image from iStock, chart from TradingView