The crypto market already has a number of challenges, and the current low level of trading activity is only adding insult to injury. Data collected by CryptoCompare shows that in 2022, trade volume on centralized exchanges like Coinbase, Kraken, and Binance fell by more than 46%. Spot trade on Binance, which still leads in terms of market share, plummeted by 45% to $5.4 trillion.

The most popular digital asset, Bitcoin, saw its trading volume drop by 31% year-over-year, the study reported. Meanwhile, Arcane Research’s “Liquid Tradeable BTC” proxy hit a new low in June 2020, and exchange balances dropped to 12% as a result of an increase in self-custody, according to research written by Bendik Schei and Vetle Lunde.

Because of this, they claim, Bitcoin liquidity would suffer because there will be fewer coins available for trading, which could lead to higher volatility. Strahinja Savic, head of statistics and analytics at FRNT Financial, remarked,

“We are witnessing some fairly amazing drops in spot activity.”

For the first week of the new year, which was cut short by the holidays, Bitcoin’s price stayed within the same narrow range of around $17,000 where it has mostly been since the end of November.


Source: Bloomberg

Several major projects, including the Terra stablecoin environment and the FTX empire, imploded last year, sending cryptocurrency prices down. Bitcoin lost 64% of its value, making 2022 its second worst year in its 14-year history.

Miller Tabak Remarks on Trading Volume

Many retail investors who had flocked into the market in the early epidemic years when lockdowns were still in effect have fled the market as token prices have plummeted. In addition, the scandals that have rocked the industry and cast a lengthy shadow over its future have scared many institutional investors.

Chief market strategist at Miller Tabak + Co. Matt Maley says low trade volumes are further evidence that organizations have deserted the asset class for the time being and that it may be some time before they return.

Matt Maley said:

“This is especially true in a bear market. Their customers are much less forgiving when they see big losses in a risky asset class during a general bear market for risk assets.”

Jared Gross, Crypto is Practically Nonexistent

According to Jared Gross, head of institutional portfolio management at JPMorgan Asset Management, those money managers who have avoided the numerous peaks and valleys of crypto may be feeling relieved for having done so. On a recent episode of the “What Goes Up” podcast, he noted, “As an asset class, crypto is practically nonexistent for most large institutional investors.”

Cryptocurrency markets are still reeling from the repercussions of the FTX empire, and observers of the market are concerned about any negative events involving other key participants. Another indication of how much recent events have rattled the business is that broker Genesis cut off about 30% of its personnel in recent days.

Despite a flood of withdrawals, crypto exchange Huobi Global received $100 million in stablecoins on Friday from digital asset entrepreneur Justin Sun. Huobi, a cryptocurrency exchange based in Singapore, came under increased pressure as a result of these trades, losing over $85 million in crypto assets over the course of 24 hours, as reported by data from Coinglass.

As the two-year bear market in cryptocurrency continues, the exchange announced on Friday that it will lay off 20% of its staff and continue operating with a “very lean crew.”

Noelle Acheson, author of the “Crypto Is Macro Now” newsletter, argues that while retail investors drive exchanges like Huobi, institutional involvement is more important for trading activity, particularly at the beginning of the next boom.

Having said that, the slowdown in the cryptocurrency market’s trading volume is keeping the overall crypto market bearish and driving a sell-off in the majority of the coins.


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