Cryptocurrency Trading Volume Hits 2024 Low, Spot Demand Weakens

BlockBeats News, February 3rd, analysis pointed out that as liquidity shrinks and risk appetite declines, the spot trading volume in the crypto market has dropped significantly, and investor participation has weakened noticeably. Data shows that the spot crypto trading volume on major exchanges has halved from around $2 trillion in October last year to $1 trillion at the end of January, falling to the low range seen since 2024.

CryptoQuant stated that spot demand has been cooling off since October, and the market correction was largely triggered by the liquidation event on October 10. The current Bitcoin price has retraced about 37.5% from the October high, and liquidity tightness has further compressed trading volume. Taking Binance as an example, Bitcoin's monthly spot trading volume has dropped from around $200 billion in October to the current $104 billion.

In addition to weak demand, market liquidity is also under pressure. Analysts noted that stablecoins continue to flow out of exchanges, coupled with a decrease of about $10 billion in total stablecoin market capitalization, further weakening the buy-side support.

At the macro level, institutions believe that short-term risks still lean towards the downside. The head of research at Arctic Digital pointed out that the market's hawkish expectations for Kevin Warsh potentially becoming the Fed chairman may imply a slowdown in rate cuts, a strengthening dollar, and rising real interest rates, thereby exerting pressure on risk assets, including crypto assets. However, some analysts still believe that the current correction is helpful in deleveraging and cooling down speculation. If there are subsequent inflows of Bitcoin ETF funds, progress in crypto-friendly legislation, or weakening economic data prompting a shift to loose monetary policy, the market may see a new window for a rebound.