Cryptocurrency trading volume took a downturn in April, marking the first monthly decline in seven consecutive months of growth. The decline, attributed to geopolitical tensions and reduced inflows into U.S.-listed spot ETFs, had a significant impact on both spot and derivatives markets.
What triggered this sudden downturn? Let’s dive deeper for answers.
According to a report by London-based digital assets data provider CCData, the combined volume in spot and derivatives markets fell sharply by 43.8% to $6.58 trillion, down from March’s record high of $9.12 trillion.
The decline was particularly noticeable in derivatives markets, which saw a substantial 47.6% drop to $4.57 trillion. Meanwhile, the spot market volume saw a less severe decrease of 32.6% to $2.01 trillion.
The CCData report pointed to several factors behind this significant decline, including unexpected macroeconomic data, escalating geopolitical tensions in the Middle East, and negative net flows from U.S. spot bitcoin ETFs.
Bitcoin (BTC), the dominant cryptocurrency, experienced a notable 15% decline in April, breaking its streak of seven consecutive months of gains. This sell-off was triggered by renewed risk aversion amid geopolitical uncertainties, reduced expectations of rapid Fed rate cuts, and strength in the U.S. dollar index.
The broader cryptocurrency market followed suit, with the most liquid digital assets plummeting by nearly 20%. Consequently, 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, 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 news of the exchange’s founder and previous CEO, Changpeng Zhao, being sentenced to prison for violating U.S. money laundering laws.
Since Zhao’s departure and Richard Teng taking over as CEO, Binance’s spot market share has rebounded slightly to 33.8%, according to CCData.
Overall, April’s decline in trading volume and market performance underscored the sensitivity of cryptocurrencies to macroeconomic factors and geopolitical events, highlighting the need for investors to navigate market conditions with caution.
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