Cryptocurrency markets worldwide experienced a significant downturn in April, with trading volumes reaching their lowest point in seven months. According to a report from London-based digital asset data provider CCData, the total trading volume in spot and derivatives markets decreased by 43.8% to $6.58 trillion.
This decline represents a sharp drop from the previous record of $9.12 trillion in March. The futures and options markets also experienced similar declines, with activity decreasing by 47.6% to $4.57 trillion. Additionally, the spot market volume fell by 32.6% to $2.01 trillion.
The decline in trading volume can be attributed to several factors, including unexpected macroeconomic data, escalating geopolitical crises in the Middle East, and negative flows from US spot Bitcoin ETFs. These factors led to major cryptocurrencies retracting the gains they had made in March.
Bitcoin, the market leader, saw a 15% drop, falling below $60,000 and ending a seven-month upward trend. This sell-off was influenced by factors such as an overheated bull market, renewed tensions in the Middle East, reduced likelihood of rapid interest rate cuts by the Federal Reserve, and a strengthening dollar index.
Although Binance remains the largest cryptocurrency exchange in terms of volume, its total market share in spot and derivatives markets fell to 41.5%. The exchange’s spot market trading volume decreased by 39.2% to $679 billion in April, marking its first decline since September 2023.
CCData attributes the decline in Binance’s market share to the sentencing of its founder and former CEO, Changpeng Zhao, to four months in prison for violating US anti-money laundering laws. However, under the leadership of Richard Teng, who succeeded Zhao, Binance’s spot market share increased from 30.8% to 33.8%.
Given the current geopolitical and macroeconomic factors affecting the cryptocurrency market, it is advisable for investors to exercise caution and conduct thorough research before making any investment decisions. Cryptocurrencies are known for their high volatility and associated risks.
