Bitcoin’s Winning Streak Snapped as Crypto Trading Volume Plunges Following 7-Month Surge

Cryptocurrency trading volume experienced a significant downturn in April, ending a streak of seven consecutive months of growth. Both spot and derivatives markets were affected, with a sharp decline of 43.8% to $6.58 trillion, down from the previous month’s record high of $9.12 trillion. This decline was primarily attributed to geopolitical tensions and reduced inflows into U.S.-listed spot ETFs.

The drop in trading activity was particularly noticeable in derivatives markets, which saw a decline of 47.6% to $4.57 trillion. The spot market volume experienced a more modest decrease of 32.6% to $2.01 trillion. The London-based digital assets data provider, CCData, pointed to unexpected macroeconomic data, escalating tensions in the Middle East, and negative net flows from U.S. spot bitcoin ETFs as the main factors contributing to this decline.

Bitcoin, the leading cryptocurrency by market value, suffered a significant 15% decline in April, breaking its streak of seven months of gains. This sell-off was triggered by renewed risk aversion due to geopolitical uncertainties, reduced expectations of rapid Fed rate cuts, and the strength of the U.S. dollar index. The broader cryptocurrency market also experienced substantial declines, with the most liquid digital assets plummeting by almost 20%. The total market capitalization of the crypto market fell by 16.8% to $2.177 trillion during the month.

Binance, the largest crypto exchange by volume, saw its market share decline to 41.5% in April, with combined spot and derivatives trading volume falling by 39.2% to $679 billion. This decline coincided with news of the exchange’s founder and former CEO, Changpeng Zhao, being sentenced to prison for violating U.S. money laundering laws. However, since Richard Teng took over as CEO, Binance’s spot market share has slightly rebounded to 33.8%, according to CCData.

Overall, the decline in trading volume and market performance in April highlighted the sensitivity of cryptocurrencies to macroeconomic factors and geopolitical events. It emphasized the need for investors to approach market conditions with caution and carefully navigate through these challenges.