The recent cryptocurrency market correction appears to have spilt over into the volume of spot trading.
Data provided by cryptocurrency data platform CryptoCompare indicates that the monthly spot trading volume plunged 31.5% in July despite the sector recording a short-term rally.
The volume stood at $1.9 trillion, recording the lowest value for 2021. Similarly, the drop also reflected on leading crypto exchanges globally to stand at $1.7 trillion or 30.7%. Elsewhere, in lower-tier exchanges, the spot volumes dropped 37.8%.
On Binance, the volume was $455 billion, followed by OKEx’s $96.8 billion, with Huobi Global accounting for $92.7 billion.
“For example, exchanges such as Binance have seen increased scrutiny from regulators across the globe. Similarly, stablecoins have also received criticism from regulators regarding potential risks to consumers and the global financial system,” CryptoCompare said.
Derivatives markets volume drops
The derivatives market also took a hit, with the volumes dropping 22.6% in July to $2.5 trillion. However, interest in crypto investment products surged in July at a weekly average of $17.7 billion, increasing 7.5% from June.
Notably, aggregate open interest in Bitcoin futures grew 4.5% to $10.1 billion while ETH futures products surged 2.4%.
From the spot volume, it is clear the crypto momentum had little impact. The cryptocurrency sector suffered high volatility between May and June, with Bitcoin plunging almost 50% from the April all-time high of $64,800.
However, towards the end of last month, Bitcoin embarked on a resurgence targeting the $40,000 mark. By press time, the asset was trading at $39,200, according to data provided by CoinMarketCap.
The plunge in Bitcoin and the general crypto market was occasioned by increasing cryptocurrency regulation. Several jurisdictions globally announced a raft of measures to regulate the sector with some citing a threat to financial stability.
Bitcoin’s price also plunged significantly due to an increased debate on the asset’s mining carbon footprint.