Cryptocurrency’s Fate Sealed? Startling Drop in Trade Volume during April Prompts Investors to Flee!
Cryptocurrency trading volume experienced a significant decline in April, breaking a streak of seven consecutive months of growth. This decline can be attributed to geopolitical tensions and reduced investment in U.S.-listed spot ETFs, which had a notable impact on both spot and derivatives markets.
The decline in trading activity was quite sharp, with the combined volume in spot and derivatives markets falling by 43.8% to $6.58 trillion, compared to March’s record high of $9.12 trillion. Derivatives markets saw a larger decline of 47.6% to $4.57 trillion, while the spot market volume had a slightly smaller decrease of 32.6% to $2.01 trillion.
Several factors were identified as contributors to this decline. Unexpected macroeconomic data, escalating geopolitical tensions in the Middle East, and negative net flows from U.S. spot bitcoin ETFs were all mentioned in a report by London-based digital assets data provider CCData. The dominant cryptocurrency, Bitcoin, experienced a significant 15% decline in April, breaking its streak of seven months of gains. This sell-off was triggered by risk aversion due to geopolitical uncertainties, reduced expectations of rapid Fed rate cuts, and the strength of the U.S. dollar index. As a result, other digital assets in the broader cryptocurrency market also plummeted by nearly 20%, leading to a 16.8% decrease in the total market capitalization of the crypto market to $2.177 trillion.
The largest crypto exchange, Binance, also saw a decline in its market share to 41.5% in April, with combined spot and derivatives trading volume falling by 39.2% to $679 billion. This decline coincided with the news of the exchange’s founder and previous 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 vulnerability of cryptocurrencies to macroeconomic factors and geopolitical events. It serves as a reminder for investors to approach the market with caution and carefully navigate the ever-changing market conditions.
Other noteworthy news in the cryptocurrency world includes the upcoming Bitcoin and Ethereum Spot ETFs in Singapore, as well as the need for strategies to navigate the current market conditions.