The month of June has seen quite a big drop in crypto trading activity across the board. In comparison to trading volumes in May, June has brought with it a 40% drop in trading volume on major cryptocurrency exchanges.
The likes of Binance, Coinbase, and Kraken have all experienced far less activity on their platforms – much of which can be attributed to lower crypto prices and a two-month correction period that has lowered volatility. Most notably, the maximum daily trading volume of Bitcoin in June was more than 42% lower than the intra-month trading high in May. Bitcoin ended the month down 6% price-wise. In recent weeks, the price of Bitcoin has plateaued somewhat – languishing around $33,000 per Bitcoin. The latest trend of lower crypto prices and decreases in trading volume can be attributed to several factors.
One of the biggest catalysts to affect crypto trading volumes in the last month has to do with China. Although China’s agenda of clamping down on crypto trading activity has been evident for some time now, their latest efforts have had more of an impact than what we’ve seen in the past. The Chinese government is actively participating in creating a state-backed digital currency – a clear admission that digital currencies may well come to the fore in the future. However, in the process, China instructed that a halt in cryptocurrency activity was necessary. Thus, it led to many mining operations to shut up shop – operations that hosted more than half of all Bitcoin’s mining power.
Furthermore, the latest narrative in relation to environmental, social, and corporate governance of Bitcoin’s proof-of-work system has also stymied trading activity. Lastly, the FATF has also proposed several regulatory measures which may weigh heavily on crypto trading activity in coming months. These factors have certainly all played a part in constraining further growth within the industry. A silver lining can be found in the fact that historically-speaking, the summer months are known to bring with it lower trading volumes – not only in crypto but also in equities.
Interestingly, it must be noted that June’s overall crypto trading volume is still significantly higher than that of a year ago. The past month, although down over 40% in comparison to May, still ranks in the top five months of trading activity ever. As such, there’s very little reason to believe that crypto exchanges will have to bear the brunt of reduced activity for an extended period of time.
If anything – with more and more institutions investing in crypto development wings, countries adopting digital currencies, and a move towards decentralized finance as a whole – the industry is set to expand exponentially rather than detract.