Crypto Trading Volume Sees First Drop in Seven Months to $6.58T Amidst Global Tensions
In a surprising turn of events, the trading volume of cryptocurrencies experienced its first decline in seven months. The cumulative monthly spot and derivatives trading volume dropped by a substantial 43.8% to $6.58 trillion. This significant retracement from the record high of $9.12 trillion seen in March can be attributed to escalating geopolitical tensions and slower inflows into U.S.-listed spot ETFs.
The decline in trading volume was observed across both spot and derivatives markets. Derivatives, in particular, fell out of favor among investors with a decline of 47.6% to $4.57 trillion. The spot market volume experienced a relatively smaller drop of 32.6% to $2.01 trillion.
CCData, a London-based digital assets data provider, pointed out that unexpected macroeconomic data, an escalation in the Middle East crisis, and negative net flows from U.S. spot bitcoin ETFs contributed to this decline. These factors led to a retracement in major crypto assets, including Bitcoin, which fell nearly 15% to under $60,000, ending a seven-month winning streak.
The decline in trading volume also had an impact on the market capitalization of cryptocurrencies. The CoinDesk 20 Index, which measures the most liquid digital assets, experienced a 20% decline, while the total crypto market capitalization slipped by 16.8% to $2.177 trillion.
Although Binance remained the largest crypto exchange by volume, its combined spot and derivatives market share decreased to 41.5%. Binance’s spot market trading volume also recorded its first decline since September 2023, tanking by 39.2% to $679 billion in April. The decline in Binance’s market share coincided with the announcement that its founder and previous CEO, Changpeng Zhao, was sentenced to four months in prison for violating U.S. money laundering laws. Since then, with Richard Teng taking over as CEO, Binance’s spot market share has increased from 30.8% to 33.8%.
Overall, the drop in trading volume highlights the impact of geopolitical tensions and market factors on the crypto industry. It remains to be seen how these developments will shape the future of cryptocurrency trading in the coming months.