Crypto Spot Trading Volumes Plummet to 2019 Levels as Bear Market Continues

Cryptocurrency spot trading volumes in the market have fallen to the same levels as in 2019 as the bear market continues to affect most digital currencies. According to a recent report released by CryptoCompare, spot trading volumes dropped to $544 billion in December. This shows that it might take a long time for investors to enter the market once again. 

Crypto Spot Trading Volumes Drop to 2019 Levels

Centralized exchanges have experienced a tough year as data from 2022 is already being released. CryptoCompare reports that trading volumes have fallen by 46% on crypto trading platforms. Despite that, Binance remained the leading exchange with a market share of 66.7% compared to 48.7% at the beginning of the year. 

It is worth taking into consideration that in November the cryptocurrency exchange FTX imploded, which allowed Binance to take a larger portion of the market. FTX was one of the largest derivatives exchanges in the world. 

That being said, the report focused on spot trading volume. Both Binance and Bybit were the only exchanges that registered an increase in their market share. Coinbase, once the largest cryptocurrency exchange in the world, lost 1.9% percentage points of market share falling from 8.2% to 10.1% at the beginning of the year. Finally, one of the largest drops was experienced by OKX, which fell to 5.9% of the crypto exchange market share from 10.7% in early 2022. 

The report reads as follows:

“One of the biggest signals showing the lack of participation is the drop in volatility and liquidity in the market. On October 22, the annualized 30-day volatility of BTC dropped to 26.6% – the lowest figure since July 2020, reflecting the risk-averse sentiment in the market.”

It is worth pointing out that the whole cryptocurrency market entered a bear trend in November 2021. This bear trend continues today, as Bitcoin (BTC) and other cryptocurrencies have lost a large portion of their value. Right now, digital assets seem to be in an accumulation period as they have been operating relatively stable over the last few months. 

When bear trends start, volatility and volumes remain quite high. This is what happened in November 2021 and the whole year. Nevertheless, as 2022 moved forward, volumes decreased almost every single month, until reaching the lowest point in three years. 

In order for volumes to recover, it would be necessary for digital assets to start moving higher. When that happens, volumes tend to increase, and sometimes exponentially. In early 2021, volumes spiked after 2020, the year in which the COVID-19 pandemic hit and affected traditional financial markets and risk assets. 

With the large printing that took place after the pandemic, risk assets started to move higher. This is the case with virtual currencies and traditional financial markets. Let’s not forget that during 2021, Bitcoin surged to over $69,000 and multiple other virtual currencies reached their all-time highs as well. 

At the time of writing this article, Bitcoin is being traded at around $16,900.