A new report has revealed that after a surge in early 2020, cryptocurrency trading volumes have hit a four-year low. First Mover Americas has found that despite the sharp increase in demand for digital coins at the start of the year, trading activity of cryptocurrencies appears to have dried up. According to an analysis of data from two of the world’s largest exchanges, the volume of crypto trades has declined by over 50 percent since the first quarter of the year. This article delves further into the data outlining the stark decline in crypto trading activity and how this could shape the future of the market.
1. Crypto Trading Volume Hits 4-Year Low
Bitcoin Continues Its Bearish Trend
Bitcoin’s dramatic surge to record levels achieved at the start of 2018 is a distant memory as trading volumes dropped to their lowest point in four years. The cryptocurrency’s price plummeted over 85 percent from its all-time-high of close to $20,000 per coin to just above $3,000. This has created a massive decrease in global trading volumes.
A Lack of Interest Leads to Low Volumes
Data shows that the month of September 2018 registered the lowest trading volume since October 2014, accounting for less than $22.8 billion. This is a significant difference to the all-time peak of $213 billion back in December 2017. The decrease in volumes is the result of a combination of factors, including lack of interest from influx of new investors and the decrease of blockchain development projects.
Continued Bearish Pressure Expected
The future of the cryptocurrency market remains uncertain. Analysts are expecting the current bearish pressure to remain for some time, although a potential recovery back to pre-2018 meltdown levels is still on the horizon. Until that point, investors will remain cautious as the market continues to ride the waves of volatility.
2. The Decline of First Mover Americas
The transition of dominance in the global market from First Mover America to its international competitors has been a gradual but sure process. Starting in the late 1990s, the American economy saw a steady decline.
Factors causing the Decline
- Slower growth in the US-manufacturing sector, compounded over the last decade,
- Increasing costs incurred as a result of changes in the regulations of financial institutions, and
- A widening trade deficit.
The effect of this was seen in the subsequent stagnant growth of GDP, GDP per capita, and other economic indicators; most notably industrial production. This slowdown conducted to a dramatic shift in the global market, allowing the UK, Germany, China, and other countries to gain comparative advantages in manufacturing and other industries.
3. Charting a Path Forward for Crypto Trading
Cryptocurrency trading is already a booming business, however there is still much room for growth. From new exchanges to streamlined services, traders can capitalize on the countless opportunities that come with crypto trading. There are three key elements to charting a successful path forward:
- Consumer-Friendly Exchanges: Exchanges should make it easy for the average consumer to buy and sell crypto. Ideally, they should provide an intuitive interface and a range of options, such as different payment types or orders. Additionally, exchanges should offer full security protections for users.
- Simplified Trading Services: Many traders have embraced automated trading platforms, which streamline the entire process. These services also make trading more accessible to novice users, as they are typically user-friendly and offer comprehensive support. Traders should look for services that have competitive fees and a wide array of options.
- Education: Lack of understanding can be a major barrier to successful crypto trading. As such, traders should make sure to do their due diligence and find comprehensive educational resources to help them understand trading concepts and strategies. This can be especially beneficial for newcomers who are just getting started.
These three elements are the building blocks of a successful crypto trading path. As traders take measures to ensure customer-friendly exchanges, streamlined services, and comprehensive education, they will be well on their way to becoming successful cryptocurrency traders.
The crypto market still has a long way to go and the lack of trading volume signals that traders remain skeptical about the long-term potential of the sector. There are still many opportunities and people are slowly beginning to explore these in the digital asset landscape. Hopefully, as the sector continues to evolve and regulation improves, more investors will come onboard and the trading volume will start to rise in the near future.