- Crypto's overall daily trade volume has dropped drastically.
- Market maturation could be behind the decrease in daily trade volume.
Cryptocurrency has seamlessly integrated into the global financial ecosystem, catering to diverse populations worldwide with its everyday utility. Nonetheless, BanklessTimes.com highlights an alarming 88% decrease in cryptocurrency’s 24-hour trade volume over the past three months.
BanklessTimes crypto expert Elizabeth Kerr commented:
BanklessTimes, crypto expert Elizabeth KerrThe decrease in the overall crypto 24-hour trade might signal the market’s stability and maturity. The excitement about crypto is reducing, and people are not rushing to trade. Additionally, traders are adopting a more cautious approach to investing, prioritizing safety and risk management in their decision-making processes.
It May be Just a Trend
In 2021, the cryptocurrency market witnessed a monumental bull run, reaching a staggering daily trade volume of $500 billion. However, as the market stabilized in early 2022, the average daily trading volume settled around $150 billion.
Interestingly, the recent decline in trade volume mirrors a similar drop observed in 2018, which followed the boom of 2017. This pattern suggests a cyclical nature within the cryptocurrency market, characterized by periods of rapid growth followed by corrective phases.
The daily trading volume of cryptocurrency for the period peaked on March 5, with a total value of $329.98 billion transacted on the day. In stark contrast. on May 13, it dropped to the lowest, at $39.41 billion, accounting for the 88% drop.
Bitcoin and Ethereum, the two dominant cryptocurrencies, have been significantly impacted by these fluctuations in trade activity. Ethereum’s daily trade volume has steadily declined, influenced by unfavorable market sentiments. Grayscale’s recent decision to withdraw from listing the Ethereum Futures ETF further strained Ethereum’s performance.
Conversely, Bitcoin’s daily transactions have grown from 409204 levels in February to the current level of 583279.0. This signifies a substantial 42.54% surge in the number of daily Bitcoin transactions, indicating sustained activity within the Bitcoin network despite the overall market downturn.
What the Drop Means
The significant drop in daily trade volume might have several meanings. The most likely reason is the maturation of the crypto market. The crypto market has continuously grown, integrating with the traditional finance system, leading to reduced volatility but a more stable trading volume.
The drop also highlights the impact of various factors such as regulatory scrutiny, mining crackdowns, market sentiment, and the emergence of alternative investment opportunities.
While these developments may contribute to short-term fluctuations, the long-term outlook for cryptocurrencies remains positive.
