Crypto market trading volume hits lowest level since 2020 amid market turmoil

In recent months, crypto markets have seen significant turmoil, leading to the lowest quarterly trading volume since 2020. Among various economic factors, bearish investor sentiment towards cryptocurrencies and the macroeconomic environment reflect a dynamic but challenging landscape.

KAICO, a crypto market data provider, Cast light on on this development along with various key industry trends. Despite low trading volume, the crypto industry ended the quarter on a positive note, demonstrating resilience.

Challenges facing TrueUSD and impact on the crypto market

Prime Trust, the crypto custodian of TrueUSD (TUSD), has faced financial difficulties, placing the stablecoin under scrutiny. Significant challenges arose as the Custodian’s financial shortfall of approximately $82 million left customers unable to make withdrawals.

Challenges Involved TrueUSD is under heavy selling pressure on decentralized exchangesFollowing the revelation that TrueUSD’s current auditing firm is a reconstituted version of FTX’s auditor. However, dDespite the selling pressure on decentralized exchanges, TUSD price remained stable around $0.999.

Kaiko revealed that a potential liquidation of Prime Trust’s holdings could have a significant impact on the token’s price due to the scale of the holdings.

Mixed performance and emerging trends

In the performance area, the second quarter saw a decline in open interest for altcoins. According to Kaiko, the Layer 2 token, which initially posted gains in the first quarter, saw a decrease of 20% to 40% during the second quarter.

DeFi tokens, on the other hand, posted an 8% decline at the end of the quarter, yet picked up momentum in June, fueled primarily by the rise of tokens such as MakerDAO’s MKR and Compound’s COMP. COMP experienced an increase of over 50% as investors ramped up their buying activities on Binance.

KAICO further revealed that the Korean Won (KRW)-denominated trade volume has surpassed that of the US Dollar. Mainly driven by WAVES and Bitcoin Cash (BCH) in the last week of the quarter. The surge in volumes was largely attributed to a surge in the price of WAVES after securing backing from DWF Labs, while Bitcoin Cash (BCH) saw a massive surge following its listing on EDX Markets.

Meanwhile, euro-denominated volumes on centralized exchanges were recorded at a two-year low since the crypto bull run in late 2020. This trend signals a shift in European market sentiment, adding to the quarter’s diverse developments.

Despite this, the crypto market has shown to be recovering from last year’s carnage. In the last 7 months, the crypto market has been on an upswing compared to the bearish trend seen in 2022.

Both small cap and large crypto assets such as Bitcoin (BTC) and Ethereum (ETH) have broken several resistances crossing important levels. Bitcoin recently traded above $31,000 before correcting below $30,427 at the time of writing.

On the other hand, Ethereum has also risen higher and is trading above the $1,900 mark and is now trying to break the $2,000 area.

Featured image from iStock, chart from TradingView