Markets
Crypto Trading Volume Plummets After 7-Month Surge, Bitcoin Winning Streak Snaps
Cryptocurrency trading volume fell in April, marking the first monthly decline in seven consecutive months of growth. The decline, attributed to geopolitical tensions and the reduction in inflows to Spot ETFs listed in the UShad a significant impact on the cash and derivatives markets.
What triggered this sudden recession? Let’s delve deeper in search of answers.
Sharp decrease in commercial activity
According to a report from London-based digital asset data provider CCDataCombined volume in the cash and derivatives markets fell sharply 43.8% to $6.58 trillion, below March’s record $9.12 trillion.
The decline was particularly notable in derivatives markets, which saw a substantial drop of 47.6% to $4.57 trillion. Meanwhile, spot market volume suffered a less severe drop of 32.6% to $2.01 trillion.
Understanding Decline
The CCData report pointed to several factors behind this significant decline, including unexpected macroeconomic data, escalating geopolitical tensions in the Middle East, and negative net flows from US spot bitcoin ETFs.
Bitcoin (BTC), the dominant cryptocurrency, suffered a notable 15% decline in April, breaking its streak of seven consecutive months of gains. This sell-off was triggered by renewed risk aversion amid geopolitical uncertainty, reduced expectations for rapid rate cuts from the Fed and strength in the US dollar index.
The broader cryptocurrency market followed suit, with the most liquid digital assets plunging nearly 20%. Consequently, the total market capitalization of the crypto market fell 16.8% to $2.177 trillion during the month.
Impact on Binance Exchange
Binance, the largest cryptocurrency exchange by volume, also saw a decline in its market share to 41.5% in April, with combined spot and derivatives trading volume falling 39.2% to $679 billion . This decline coincided with the news that the exchange’s founder and previous CEO, Changpeng Zhao, was sentenced to prison for violating US money laundering laws.
Since the departure of Zhao and Ricardo Teng Taking over as CEO, Binance’s spot market share has recovered slightly to 33.8%, according to CCData.
Overall, April’s decline in trading volume and market performance highlighted the sensitivity of cryptocurrencies to macroeconomic factors and geopolitical events, highlighting the need for investors to navigate market conditions with caution.
Also check out: Hong Kong Bitcoin and Ethereum Spot ETFs Coming to Singapore
Feeling the crypto chill? What strategies are you using to navigate the market?