Trading volumes are the lowest they’ve been in over two years. In the last quarter alone, they fell by a factor of 2.5 on centralized exchanges. Although significant, this drop in volumes does not affect all cryptocurrencies equally: altcoins are the biggest victims of this bear market.
Falling trading volumes
Despite Bitcoin’s (BTC) recent rise to the $30,000 mark, the cryptocurrency sector faces a daunting challenge: how to rekindle the flame of transaction volumes?
In one of its latest reports, the Kaiko company has unveiled data concerning trading volumes on the cryptocurrency market. As a reminder, trading volume represents the total amount of trading that has taken place on a given security.
So, according to the company specializing in data analysis, quarterly trading volume is at its lowest since autumn 2020. Note that this chart is based solely on data from 25 centralized exchanges, including Binance, Coinbase, Kraken and OKX, to name but a few.
Quarterly trading volume on cryptocurrency exchanges
With a volume of around $1.75 trillion per quarter, the cryptocurrency sector is far from having lost all its investors. However, the fall in these figures during previous quarters testifies to the sector’s declining financial activity.
Indeed, transaction volume was divided by 4 since peaking at $8,000 billion during the 2021 bull market. Similarly, between the first and second quarters of this year, these same volumes plunged by -250%.
Volumes are regularly used in technical analysis, one of their main functions being to detect moments of euphoria and calm on a given asset.
Furthermore, these data show that the arrival of the bear market has scared off a number of investorsat the same time reducing the number of financial transactions on centralized exchanges.
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Altcoins on the bench
For a closer look of the situation on the cryptocurrency marketan analysis separating the two largest assets in the sector (BTC and ETH) and altcoins needs to be carried out.
At the time of writing, investor interest is focused on the two stocks with the largest market capitalization, namely Bitcoin and Ether. Over the past year, their dominance of the cryptocurrency market has increased significantly ETH’s share of the market has risen from 15% to 20%, while BTC’s share has risen by a further 8% to 51%.
Bitcoin’s dominance of the cryptocurrency market over the past year
In the cryptocurrency market, dominance is a tool offering an overview of assets trusted by investors. The rise in dominance of the world’s two largest cryptocurrencies demonstrates that investors are retreating from altcoins to assets considered more reliable.
Regarding other cryptocurrencies, with the exception of a few narratives and other outsiders, the majority of them did not benefit from the successive rises in Bitcoin and Ether.
The latter, on the other hand, were able to offset their losses following FTX’s collapse, altcoins remain in a downtrenda situation exacerbated by recent SEC rhetoric regarding some of these assets as financial securities.
One-year trend in cryptocurrency market capitalization, excluding ETH and BTC
Over the last 12 months, Bitcoin has risen by 57%.while Ether stood out with 76% growth. Altcoins, meanwhile, are struggling to recover: after one year, their total capitalization has fallen by 5%.
As a result, interest in crypto-currencies is uneven across the different assets: during the current bear market, altcoins, considered the riskiest stocks on the market, are being abandoned in favor of BTC and ETH.
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Sources : Kaiko, TradingView
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A lifelong enthusiast for new technologies, I gradually became involved in Web3 activities in the year 2021. As time went by, I wanted to do my bit. That’s when I became a writer, with a view to explaining cryptocurrency-related topics to as many people as possible.
Timothy Bourbotte
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