Amid the continued decline in the crypto assets the spot trading volumes have taken a severe hit over earlier this year in January. Digital asset data provider CryptoCompare reports that the total spot trading volume on crypto exchanges crashed over 30% sequentially by 1.81 trillion last month.
The report also mentions that the total spot trading volumes have reached their lowest at $1.17 trillion since December 2020. The crypto spot trading volumes peaked during November 2021 at $3.2 billion.
Crypto assets have continued to show massive volatility as investors are selling risk-off assets post the Fed commentary. The Federal Reserve has clearly hinted at raising the interest rates multiple times this year owing to high inflation.
Over the last month, the price of some of the top cryptocurrencies like Bitcoin and Ethereum has corrected to the tune of 20-25%. On the other hand, the price of some of the altcoins has been cut in half.
Further analysis shows that during January top-tier spot volumes fell 21.2% to $1.6 trillion and lower-tier spot volumes decreased 66.3% to $175 billion. The top-tier exchanges currently represent 90% of the spot trading volumes.
Derivatives Market Sees Increased Activity
While there’s been some slowdown in spot trading, the derivatives market has seen increased activity in the last month of January. This suggests growing speculation and hedging from market participants as they move to trade futures and options.
The CryptoCompare report notes that the derivatives market volumes remain steady at $2.86 trillion. Well, the derivatives market has also reached an all-time high market share of 61.2% even breaking its previous all-time high of 57.3% back in November 2020. The CryptoCompare report also mentions:
“Having said this, derivative market volumes remain notably below the all-time highs reached in May 2021, when volumes reached $4.96 trillion”.
Looking at individual exchanges, Binance was the largest top-tier exchange by volume in January last month. Binance was also a forerunner in the derivatives market contributing 51.6% of total volumes in January.