Bitcoin continued its sluggish price trajectory as it entered the second week of January. However, the coin is currently at an almost 90-day low, shortly after the Federal Reserve hinted at a rate hike.
With that being said, CryptoCompare’s Exchange Review for December 2021 also explains how weak prices have affected spot volumes. The report notes,
“In December, spot volume from the 15 largest Top-Tier exchanges fell 22.6% compared to November, for a total spot volume of $1.4 trillion.”
This sets the stage for Bitcoin experiencing its biggest monthly loss in December, according to the report. A drop not seen since the asset crashed 49.2% in May 2021, from a price of $58,943 to $29,925 in just 19 days.
This time around, BTC is hovering near $42,000, having dropped 9.4% over the past week and 17% over the past month on CoinGecko.
However, in December, CryptoCompare highlighted that lower-end spot volume jumped nearly 117% to a seven-month high to $518 billion. With Binance leading the list of individual exchanges as the largest top spot exchange by volume for the month after trading $655 billion. Its trading volume is still down 29.8% month-on-month.
Meanwhile, another Bloomberg report also noted a decrease in trading volume at the top exchanges, as investors turned to “embrace” in the current environment.
Owen Lau, an analyst at Oppenheimer & Co. told Bloomberg,
“Price drop can cause trading volume to drop when it gets to the point where it discourages traders from participating. There is a possibility of digital asset prices moving sideways such as entering crypto winter after a price drop. ”
Interestingly, leading crypto exchange FTX.US is also seeing lower trading volumes last week. As noted by President Brett Harrison in a recent interview,
“To me, it looks like we are in a period where only volume and trading activity soften after the general decline.”
Explain further that weak prices indicate reduced volume for a longer period of time after panic selling subsided. This, he added, calls for “more confidence” from retail investors.
However, instead of confidence, extreme fear persisted in the market on the day of writing. In fact, a record low since last July.
The Crypto Fear and Greed Index fell to 10, its lowest level since July 21, 2021. pic.twitter.com/ZNbTnuH3cb
– Wu Blockchain (@WuBlockchain) January 8, 2022