Crypto Trading Volumes Sink Amid Floundering Market

Cryptocurrency trading volumes have plummeted across different markets platform amid a dismal first half of the year for the industry.

Prominent platforms affected by the drop in trading volumes include major cryptocurrency exchanges such Binance, OKX and FTX. Coinbase has reportedly lost so much trading volume it is no longer the largest cryptocurrency exchange in the United States.

As cryptocurrency markets have been struggling, it is no surprise that this has been reflected in traders’ enthusiasm. This however marks a contrast from the past two years, when retail investors clambered into crypto and other risky assets amidst a flurry of free time and stimulus cash.

“For moms and pops, when you see something sell off that much, they probably aren’t as interested,” said Chris Gaffney, president of world markets at TIAA Bank. “They hate buying something that’s in a free fall, or even something that has fallen and stabilized. They want to see that first leg up.”

Volumes decline

Across exchanges, trading volumes in spot and derivatives have fallen more than 15% to roughly $4.2 trillion since May, according to data compiled by CryptoCompare. This marks the lowest level since Jan of last year.

Meanwhile, the month of June alone saw spot volumes drop nearly 28% to $1.41 trillion. Over the course of the month, derivatives trading volumes dipped by 7%, the lowest since July 2021. The latter figure is especially significant in the crypto markets, as derivatives make up more than half the market.

Data from CryptoCompare also show that with volume of $29 billion, Bitcoin futures contracts
reached their lowest volume traded last month since July 2021 at the Chicago Mercantile Exchange (CME). Futures contracts for Ethereum also dropped by over 20%, which, according to CryptoCompare, indicated a “fall in speculative activity.”

“Volume has declined given the reduced excitement from investors in a cyclical bear market,” said Katie Stockton, co-founder of Fairlead Strategies. “Until crypto prices break out of their bear-market cycle, which could take months, we can expect volume to be below average.”