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Crypto Winter Freezes Trading; Lowest in 2 Years

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Cryptocurrency trading volumes have hit their lowest in two years amid the coldest crypto winter in recent history.

According to CryptoCompare, spot and derivatives folumes have fallen over 15% in June from the previous month to US$4.2 trillion – the lowest monthly volume since January 2020. Spot volumes have fallen by 28% to US$1.41 trillion – the lowest since December 2020.

“Volume has declined given the reduced excitement from investors in a cyclical bear market,” said Katie Stockton, co-founder of Fairlead Strategies. “Until crypto prices break out of their bear-market cycle, which could take months, we can expect volume to be below average.”

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Derivatives, which make up half the crypto market, were also down 7% – the lowest since July 2021.

With increase FUD in the market, public interest in the crypto space is clearly dwindling. What seemed to be a hedge against inflation is no longer regarded as a safe alternative to trad-fi.

“For moms and pops, when you see something sell off that much, they probably aren’t as interested,” Chris Gaffney, president of world markets at TIAA Bank, said in an interview. “They hate buying something that’s in a free-fall or even something that has fallen and stabilized. They want to see that first leg up.”

Funding for crypto enterprises has also faced a sharp fall. Despite achieving a record US$9.85 billion in venture funds in the first quarter, private crypto funding declined 31% in Q2.

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Trading volumes returning to their previous highs will certainly take time and will require the restoration of investor faith in the crypto space. As Bank of England deputy governor John Cunliffe said in a speech at the British High Commission in Singapore, “people don’t fly for long in unsafe aeroplanes.”