Deal volume in cryptocurrency market has fallen to values of December 2020. Our experts have analyzed what is happening in this industry and told us when volumes will start to grow again
In October, trading volumes on cryptocurrency exchanges updated the minimum since December 2020. The amount of transactions on trading floors last month amounted to $543 billion compared to $733 billion in September.
Main reasons for volume fall
The main factors that influenced the decline in trading volumes include falling cryptocurrency prices. And, as a consequence, a decrease in interest in popular and hype assets, such as NFT and DeFi. As well as external factors, primarily risks of recession in western economies on back of tighter monetary policy. And geopolitical tensions that have increased this year.
At the same time, according to our Crypto-Upvotes expert, it is impossible to talk about a decline in interest in cryptocurrencies. Despite the decreased trading volumes of retail players and low interest in social networks and media space. Blockchain technology itself and crypto-projects are actively financed by funds and institutional investors.
Market has been in a sideways trend for 137 days (4.5 months), our finance expert recalled. When the price trades in a limited range for a long time, investors get nervous, he said.
“Statistically, markets are in a sideways trend more than 75% of the time. You have to live with that. Buyers’ activity remains low on the background of risk aversion.” – explained our specialist.
Is “Crypto Winter” in hot phase? What will happen to cryptocurrency trading volumes?
Low trading volumes indicate that the cryptocurrency market is in the “crypto winter” stage.
However, the current situation in the crypto market cannot be called “crypto winter”. Unlike a similar period in 2018-2019, both capitalization and number of participants are much higher now. And development of blockchain products has not stopped, despite falling prices for cryptocurrencies.
Volume of investment in industry from outside also indicates normality of current market situation. And the volatility on individual top assets is quite enough to make money even in current periods of time.
Trading volumes will grow as volatility rises and prices of major crypto assets move out of the ranges they have been in since this summer. Once market participants understand the direction of further movement. They will immediately connect to it, which will allow trading volumes to grow according to our Crypto-Upvotes experts.
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