Is Bitcoin Losing Its Sheen Among The People?

Plummeting volumes on major cryptocurrency exchanges, lower number of new wallets and fear due to regulatory crackdown signal lowered interest in Bitcoin BTC/USD.

What Happened: Cryptocurrency market data firm CryptoCompare indicated that trading volumes at large trading platforms such as those run by Coinbase Global Inc COIN, Kraken, Binance, and Bitstamp have declined more than 40% in June, CNBC reported.

As per CryptoCompare,  the shrinking volumes are reportedly due to lower prices and lower volatility.

Trade on the cryptocurrency derivatives market exceeded spot trade in June, as per CryptoCompare data, as reported by Bloomberg.

Derivatives reportedly accounted for 53.8% of the market share in June, while in May that number was at 49.4%. Derivatives volume in June stood at $3.2 trillion. Spot volume was $2.7 trillion.

See Also: How To Buy Bitcoin (BTC)

Why It Matters: The China crackdown factor was noted by Teddy Vallee, chief investment officer at Pervalle Global, CNBC reported.

“The digital asset ecosystem got punched in the face, so it’s currently up against the ropes versus fighting in the middle of the ring. Typically when you have large sell-offs, participants are quite fearful and pull back their chips,” said Vallee.

The executive pointed to a lack of large flows back off exchanges, negative funding rates, and a lower number of new wallets to drive home his point.

Gabor Gurbacs, director of digital assets strategy at VanEck, a global investment manager, observed that summer is a time for lower volumes, as per CNBC.

However, the analyst also pointed to sky-high BTC and Ethereum ETH/USD prices seen in 2021 which brought in fresh investors to cryptocurrencies that had not yet lived through a bear market.

See Also: Is Now The Time To Buy Ethereum (ETH) Cryptocurrency?

“Half the market is gone, we can’t expect the same volumes when the market is basically a lot of people who are new to the space who got spooked,” said Gurbacs, as per CNBC.

BTC is down 49.36% from its all-time high of $64,863.10 it touched in mid-April, while ETH has crashed 54.5% from its all-time high of $4,362.35 registered in May.

BTC traded 4.18% lower at $32,853.51 at press time over 24 hours, while ETH traded 7.29% lower at $1,988.48.

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