Cryptocurrency Trading Volume Plunges in April amid Tightening Financial Conditions and Geopolitical Tensions

According to recent reports, trading volume on major cryptocurrency exchanges decreased significantly in April for the first time in seven months. Spot trading volume on platforms like Coinbase Global, Binance, and Kraken fell by 32.6% to reach $2 trillion last month, as revealed by data from CCData. Similarly, derivatives trading volume also witnessed a decrease of 26.1% during the same period. This downturn follows an unprecedented surge in trading volume caused by the introduction of US exchange-traded funds (ETFs) investing in Bitcoin. However, the tightening of financial conditions in the United States, coupled with rising inflation rates and geopolitical tensions in the Middle East, has led to a drop in demand for cryptocurrencies. As a result, Bitcoin’s spot price has remained relatively stagnant, causing a significant decrease in trading volume. The spot market share of Binance, the largest cryptocurrency exchange, also fell to 33.8% – its lowest level since January 2021, as per CCData’s data. The CME Group also witnessed a decrease in trading volume, down by nearly 20% in April. Despite this, trading activity on centralized exchanges continues to exceed levels recorded during previous months, albeit at a lower rate than in March. Overall, experts suggest that the current trend reflects typical slowing of trading activity in the two months following a Bitcoin halving event. The surge in inflation and geopolitical tensions have also contributed to the current market sentiment, leading to negative net flows from spot Bitcoin ETFs, resulting in a price drop for major cryptocurrencies towards their range lows.