For the past couple of months, the crypto market has been going through many things, especially the roller coaster of regulators worldwide. SEC going after multiple crypto projects including top crypto exchanges like Coinbase, Binance, and other crypto projects in the battle of unregistered securities. Amid these situations, there were a lot of falls and rises in the crypto market and which affects the trading frequency of traders and that reflects in the trading volume. All the market sentiment can be understood or perceived by analyzing the trading volume data. Although it is entirely based on historic data, it provides very important insights for understanding the market patterns and behaviors if looked in the right direction. So, in this article, we will look into the trading data provided by some of the top data analysis firms in the crypto space and try to look through it, so let's dive into it!!
[The purpose of this article is to share the data available and derive some conclusions based on it. It is advised not to take any trading or investing decisions based on this data wholly. Do your own research and trade/invest responsibly!]
Quarterly Trade Volume
Kaiko, one of the top crypto analysis firms in the crypto space has published the quarterly trade volume data. We can clearly see that in the second quarter of 2023, there is a significant drop in the crypto trading volume. This could be the result of various factors like many centralized projects going through the process of bankruptcy, many getting into it, and the lack of regulatory clarification. This shows a lack of confidence in the world of trading.
The trading volume also provides the aggregate market sentiment of the traders for the past quarter, and the smaller trading volume shows that there was a fearful sentiment in the market which is why many traders didn't get into trading much. It also implicates the uncertainty or the instability of the crypto market. If we check and confirm with the market sentiment chart of the last three months, then we can see that the most of the period the chart stayed below 50 points, which falls under the 'Neutral' and 'Fear' zone.
Monthly Spot Volume
As we have gone through the quarterly trading volume, now let's narrow down our view to monthly data and specific to the spot trading data. In the below chart, there is monthly spot volume data as per the top leading crypto exchanges.
First, let's focus on the spot volume of March - April, we can see a significant drop in April followed by May, this monthly data also backs up the data we recently saw in the quarterly period. As always, the Binance had the highest volume followed by the Coinbase. That sudden fall in the spot trading volume shows the shock of the retail traders that continued for two consecutive months. But the good thing is that the spot trading volume is rising, which means the retail traders have absorbed the shock and now getting back into trading, which is quite a good thing for the market.
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