A sluggish crypto market: Exchange volumes in free fall

April 2024 will go down in history as a bleak month for the crypto market. Trading volumes saw their lowest level in seven months, weighed down by a combination of unfavorable geopolitical and macroeconomic factors. Even the giant Binance was not spared by this bearish wave.

A Sudden Contraction in Crypto Market Activity

The month of April experienced a sharp decline in trading volumes on the crypto markets. According to the report from CCData, a London-based digital asset data provider, the total volume of spot and derivatives transactions fell by 43.8% to reach $6.58 trillion, the lowest level in seven months.

This decrease sharply contrasts with the record $9.12 trillion recorded in March. The futures and options markets also suffered, with a 47.6% decrease in activity to $4.57 trillion. The spot market volume contracted by 32.6% to $2.01 trillion.

The report from CCData identifies several factors that contributed to this slowdown: disappointing macroeconomic indicators, escalating geopolitical tensions in the Middle East, and negative flows from US ETFs tied to bitcoin. In this context, the major crypto assets erased the gains made in March.

Bitcoin and Binance Under Pressure

Bitcoin, the benchmark crypto asset, lost 15% in April, falling below the psychological threshold of $60,000, and ending a seven-month bullish streak. This correction results from a combination of factors: an overheated bull market, renewed geopolitical tensions, a reduced likelihood of the Fed quickly easing its monetary policy, and a strengthening dollar.

Furthermore, among exchange platforms, Binance, the undisputed leader of the sector, saw its overall market share on spot and derivatives segments decline to 41.5%. The volume of transactions on its spot market decreased by 39.2% to $679 billion in April, a first since September 2023.

CCData links this decline to the sentencing of Binance’s founder and former CEO, Changpeng Zhao, to four months in prison for violating US anti-money laundering laws. However, under the direction of Richard Teng, his successor, Binance’s spot market share climbed from 30.8% to 33.8%.

In conclusion, the crypto market is going through a phase of turbulence, buffeted by opposing geopolitical and macroeconomic winds. In this climate of uncertainty, investors would be wise to exercise great caution. The much-anticipated recovery will thus depend on the evolution of the global situation and the industry’s ability to restore market players’ confidence.

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