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Bitcoin Cryptocurrency trading volume plunges as interest wanes following bitcoin price drop

Cryptocurrencies are in a summer slump as they navigate a two-month correction period following a string of negative stories.

Trading volumes at the largest exchanges, including Coinbase, Kraken, Binance and Bitstamp, fell more than 40% in June, according to data from crypto market data provider CryptoCompare, which cited lower prices and lower volatility as the reason for the drop.

In June the price of bitcoin hit a monthly low of $28,908, according to the report, and ended the month down 6%. A daily volume maximum of $138.2 billion on June 22 was down 42.3% from the intra-month high in May.

The report pointed to China as a major catalyst, according to Reuters, which reported on it earlier Monday. China’s latest of many efforts over the years to crack down on the industry have had a greater impact than ever before. Investors and experts in the cryptocurrency ecosystem still see a long-term positive trend for bitcoin and other cryptocurrencies, however.

Factors behind the slowdown

At the end of June, China ordered a halt to cryptocurrency as it prepares to launch its own state-backed digital currency. That shuttered mining operations across various provinces that had hosted 50% to 60% of all of bitcoin’s mining power.

This year too, he added, the price of bitcoin climbed as high as $60,000 and ether as high as $4,000, which brought a lot of new interest and new investors into cryptocurrency that haven’t weathered a bitcoin bear market yet.

When cryptocurrencies hit their all-time highs this year “a lot of people invested upwards and a lot of new people invested at the top, and they lost money,” he added. “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.”

Volume still higher than a year ago

Despite the dramatic drop in trading volume, it’s still much higher than it was last year, Clara Medalie, research lead at crypto market data provider Kaiko.

Mancini of Trade the Chain still sees a more bullish — rather than bearish — outlook for crypto and expects volatility and volume to return to previous highs.

Reference: CNBC