As a researcher with extensive experience in analyzing crypto markets and macroeconomic factors, I believe that last month’s correction was driven by a combination of historical trends and current geopolitical turmoil. The data from CCData highlights a significant drop in spot trading volumes on centralized exchanges (CEX), which is a common trend following Bitcoin halvings. Additionally, ongoing inflation concerns and uncertainty in the U.S. have shaken market confidence, causing investors to take a cautious stance.
Last month, I observed a significant shift in crypto markets due to various macroeconomic factors affecting the U.S. economy and geopolitical instability. This led to a noticeable decrease in trading volumes that had not been observed for over 30 weeks.
Last month, the volume of spot trades in cryptocurrencies on major centralized exchanges, including Binance and Coinbase, experienced a significant decrease of 32.6%. This downturn can be attributed to a widespread correction affecting various market sectors.
The trading volume for spot markets in crypto dropped to $2 trillion, which is the lowest it has been since September of the previous year. Likewise, the trading volumes for derivative tokens reached a seven-month low of $4.5 trillion, representing a significant 26.1% decrease. Binance, the largest cryptocurrency exchange, experienced a decrease in market share as crypto trading activity retreated from its peak this year. As a result, Binance’s control over digital asset trading shrank by 4%, bringing it down to 33.8%.
/1 Our latest Exchange Review is now live! This monthly report provides readers with insights into #crypto exchange volumes.
In April, the combined volume of spot and derivatives trading on centralised exchanges fell by 43.8% to $6.58tn.
— CCData (@CCData_io) May 9, 2024
Based on the information from the data source, it appears that the shift in trend could be explained by a traditional pattern that emerges following Bitcoin (BTC) halvings. Last month marked the activation of an update which reduced the number of freshly mined tokens by half. This development significantly diminished the income for Bitcoin miners and heightened the scarcity of BTC.
As a CCData researcher, I’ve observed a noticeable decrease in CEX trading activity post-halving on two occasions. This cooling off could be attributed to the heightened uncertainty surrounding inflation in the United States. The apprehension among investors regarding potential interest rate hikes has further shaken market confidence.
Surprisingly high CPI inflation figures and heightened geopolitical tensions in the Middle East have introduced a degree of apprehension and anxiety into financial markets. At the same time, there have been substantial outflows from Bitcoin ETFs, causing the prices of major cryptocurrencies to reach their lower price ranges.
Jacob Joseph, CCData researcher
This year, the U.S. Securities and Exchange Commission’s (SEC) green light for Bitcoin spot Exchange-Traded Funds (ETFs) fueled optimistic feelings and propelled cryptocurrency prices to unprecedented peaks (all-time highs or ATH). Surpassing its earlier ATH of $69,000 in 2021, Bitcoin reached a new height, soaring above $73,000 in March.
Major figures in the financial sector, such as BlackRock and Fidelity, saw their asset portfolios grow beyond $10 billion just a few short weeks after debuting, shattering previous records. However, they have experienced continuous withdrawals in more recent times.
Despite the broader market appearing to experience a slump following Bitcoin’s halving and encountering difficulties in attracting new liquidity for spot Bitcoin ETFs, Palisade’s co-founder Manthan Dave shared his optimistic view with crypto.news that prices would significantly increase by the end of the year.
An expert holds the view that approved Ethereum ETFs (Exchange Traded Funds) might draw additional investment capital towards cryptocurrency markets. These ETFs would serve as a viable option for those seeking alternatives to Bitcoin-backed investment vehicles.
Bitcoin ETFs represent a significant shift in the crypto market. Over time, they are expected to boost investor confidence in digital currencies and decrease market instability. The launch of an Ethereum ETF is anticipated, bringing new funds into the Ethereum ecosystem due to its eco-friendly image compared to Bitcoin. However, it may also lead some investors to move capital from Bitcoin ETFs as they diversify their holdings.
As a researcher studying the cryptocurrency market trends, I believe we may witness Bitcoin flirting with the $100,000 mark before the year comes to an end.
Manthan Dave, Palisade co-founder
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2024-05-10 19:43