Cryptocurrency trading volume drops to 2024 lows as spot demand weakens
BlockBeats News, February 3, analysis indicates that as liquidity contracts and risk appetite declines, spot trading volume in the crypto market has dropped sharply, with investor participation clearly weakening. Data shows that the spot crypto trading volume on major exchanges has halved from about $2 trillion in October last year to $1 trillion at the end of January, falling back to the low range since the start of 2024.
CryptoQuant stated that since October, spot demand has continued to cool, and the market adjustment was largely triggered by the liquidation event on October 10. The current price of bitcoin has retreated about 37.5% from its October high, and tight liquidity has further compressed trading volume. Taking one exchange as an example, bitcoin's monthly spot trading volume has dropped from about $200 billion in October to the current $104 billion.
In addition to weak demand, market liquidity is also under pressure. Analysis shows that stablecoins continue to flow out of exchanges, and combined with a reduction of about $10 billion in total stablecoin market cap, this has further weakened the buying base.
On the macro level, institutions believe that short-term risks remain tilted to the downside. The head of research at Arctic Digital pointed out that the market's hawkish expectations for Kevin Warsh possibly becoming the chairman of the Federal Reserve could mean a slower pace of rate cuts, a stronger dollar, and rising real interest rates, thereby putting pressure on risk assets including crypto assets. However, some analysts still believe that the current adjustment helps to clear leverage and cool speculation. If there is a renewed inflow of bitcoin ETF funds, the advancement of crypto-friendly legislation, or if weaker economic data prompts a shift to looser monetary policy, the market may usher in a new rebound window.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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