The world of cryptocurrencies, characterized by its rollercoaster-like volatility, has taken another unexpected twist. Recent reports indicate that the quarterly crypto trading volume has fallen drastically, landing at its lowest levels since 2019. But what does this mean for crypto enthusiasts, traders, and investors? Let’s take a closer look.
- 1 What is a Crypto Trading Volume?
- 2 Why is a Traded Volume important to read?
- 3 How to Measure Crypto Trading Volume?
- 4 Crypto Trading Volume Plunge: What Are The Numbers Saying?
- 5 The Root Cause: Bear Market & Regulatory Clampdown
- 6 The Top Cryptos: Bitcoin and Ethereum
- 7 The Silver Lining: Stablecoins Holding the Fort
- 8 Conclusion: Will Cryptos go UP?
What is a Crypto Trading Volume?
Trading volume, in the context of financial markets including cryptocurrencies, refers to the number of shares or contracts traded in a security or an entire market during a given period. Essentially, it is the total quantity of a security that was bought and sold during a specified time frame.
Why is a Traded Volume important to read?
Trading volume is a critical measure of liquidity, investor interest, and the market’s activity. Higher trade volumes for a specified security mean higher liquidity, better order execution, and a more active market for that particular security.
How to Measure Crypto Trading Volume?
- Choose the period: Decide the timeframe for which you want to measure trading volume. It could be intraday, daily, weekly, monthly, quarterly, or yearly.
- Total the trades: Add up the total number of shares or contracts that traded hands during that period. Every time an investor buys or sells shares, the number of shares exchanged is part of the total trading volume.
- Use Exchange Data: Crypto exchanges often provide real-time data on trading volumes for each listed cryptocurrency. This information can be accessed through their respective websites or trading platforms.
- Use Market Aggregators: There are also websites known as market aggregators (like CoinMarketCap or CoinGecko) that compile and present this data from various exchanges, providing an overall view of trading volume across all major exchanges.
Crypto Trading Volume Plunge: What Are The Numbers Saying?
The first quarter of 2023 was less than enthusiastic for crypto trading. The global trading volumes nosedived, echoing levels unseen since 2019. The downtrend from the prior quarters continued its grip on the market, showing no signs of abating. Total crypto trading volume for the quarter reportedly stood at a mere $4.3 trillion, a sobering 67% plunge from the dizzying heights of $13.9 trillion recorded during the fourth quarter of 2022.
The Root Cause: Bear Market & Regulatory Clampdown
The question on everyone’s mind is, “Why this drop?” The first and most prominent reason is the extended bear market that has been influencing the crypto industry. Several cryptocurrencies have lost significant value over the last few months, and the lower prices, coupled with the decreased volatility, have led to a decrease in trading volumes.
The second factor is the ongoing regulatory clampdown worldwide. The actions taken by authorities, including crackdowns on mining operations and stringent regulations, have generated a sense of apprehension and uncertainty among traders, resulting in lower participation.
The Top Cryptos: Bitcoin and Ethereum
Bitcoin and Ethereum, the two stalwarts of the crypto world, were not spared from this downtrend either. Bitcoin, the leading cryptocurrency, saw its trading volume tumble by 66% compared to the fourth quarter of 2022. Ethereum didn’t fare much better, as it too experienced a decrease of about 67% over the same period.
The Silver Lining: Stablecoins Holding the Fort
Stablecoins, however, have emerged as a beacon of resilience amidst the overall gloom. Despite the declining volumes, the trading volume of stablecoins actually increased by 2% during the first quarter of 2023. This is likely because traders turned to the relative safety of stablecoins in the midst of the volatility and uncertainty plaguing the broader market.
Conclusion: Will Cryptos go UP?
Despite the challenging circumstances, the crypto industry remains hopeful. While the reduced trading volumes are a cause for concern, they also represent a period of consolidation and maturation for the market. The current scenario could be an opportunity for traders and investors to recalibrate their strategies and prepare for the potential upswing.
As the regulatory landscape becomes more clear and as more institutions and businesses continue to embrace cryptocurrencies, the industry will likely rebound. Until then, the watchword is patience and prudence. The current bearish outlook could just be the calm before the next exciting chapter in the saga of cryptocurrencies.
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