Crypto Exchanges Activity And Volumes Fall To 2020 Levels
The crypto exchanges' activity and volumes are significantly decreasing amid the bearish trend in the market. The situation is backed by the outflow of institutional investors' funds.
Major figures in the crypto community are discussing the current market sentiment. Despite bright events in the crypto space, such as Grayscale's victory against the SEC, speculation about the future of ETFs, etc., traders are slowly leaving the exchanges.
The Block discovered that Bitcoin volume was down 6.7% last month, while Ethereum volume was down 5.7%. Bitcoin miners experienced a 6.8% drop in revenue.
1/13 August summary 🧵
— Lars (@lars0x) September 1, 2023
Most metrics corrected further.
Total adjusted on-chain volume decreased by 6.3% to $176B (BTC: -6.7%, ETH -5.7%): pic.twitter.com/qEgaJ1ErPf
This year, Bitcoin transactions worth about $7 billion were held on centralized exchanges. In 2022, this index was at $11 billion. A significant decrease in the volume of trades follows from the second quarter of 2023.
A Rekt Capital analyst believes that Bitcoin will fall to the $22,000 mark this month. He believes Bitcoin historically experiences a drawdown in September. Another analyst, Will Clemente, predicts the price of BTC to fall to 2020 levels to $20,000.
Could Bitcoin Crash to $22,000 In September?
— Rekt Capital (@rektcapital) August 24, 2023
To answer this question, we need to first focus on August
What was the worst #BTC August drawdown in history?
-17% in 2014 and -18% in 2015
Currently in 2023, $BTC is now down -16%
If BTC were to drop -18% this August, BTC would… pic.twitter.com/58pJKUwvHj
The exchanges activity decrease is also a result of a number of other reasons. Coinshares noted that the market saw increased interest in stablecoins in early 2023. It coincided with the start of the Fed's rate hike cycle. The rate hikes led to a rise in the dollar index. This, in turn, prompted investors to liquidate their Bitcoin holdings in favor of stablecoins.
Yet, inflation in the US slowed in 2023, which raised hopes for a less aggressive Fed policy. As a result, the dollar index fell, and the volume of stablecoins began to decline.
Another factor explaining the low trading activity on exchanges in 2023 is the regulator's aggressive policy against major crypto participants. This year, the SEC targeted Binance, worrying about another FTX situation. This led to a BUSD token volumes drop.
Therefore, the outflows and low volumes on crypto exchanges are understandable: investors are more likely to sell their assets.
