On-chain data shows the cryptocurrency traders have hit the snooze button as Bitcoin and other assets have witnessed a plunge in volume.

Bitcoin & Altcoins Have Seen A Trading Volume Crash Recently

According to data from the on-chain analytics firm Santiment, trading volume has seen a slowdown in the cryptocurrency sector during the past week.

The “trading volume” here refers to an indicator that keeps track of the total amount of a given asset that’s becoming involved in trading activities on the major exchanges. When the value of this metric goes up, it means the investors are participating in a higher amount of activity related to the coin. Such a trend implies interest in the asset is on the rise.

On the other hand, the indicator observing a decline suggests the traders may be starting to put their attention elsewhere as they are taking part in a lower amount of activity.

Now, here is a chart that shows the trend in the combined Bitcoin trading volume for four different segments of the digital asset sector:

The value of the metric appears to have gone through a decline for all of these groups | Source: Santiment on X

In the above graph, the four sides or segments of the cryptocurrency market displayed are: Memecoins Top 6, AI & Big Data Top 6, Layer 1 Top 6, and Layer 2 Top 6.

“Layer 1” assets refer to those that circulate on blockchains that handle their own security and aren’t built on top of another ecosystem. Bitcoin and Ethereum are the most prominent examples of coins of this type. The coins that aren’t on primary networks, like Polygon (MATIC) and Arbitrum (ARB), are termed Layer 2.

From the chart, it’s apparent that the six largest coins for both of these categories have seen a sharp decline in their trading volume recently. Segments like meme-based tokens and AI-related coins have also noted cooldowns of their own at the same time.

Back in November and the first half of December, the volume was high across the market as traders made a large number of moves during the Bitcoin bull run hype. It would appear, though, that the recent bearish shift has damaged the investor morale.

After the latest continuation of the decline in the indicator, trading activity in the market has slumped to the lowest level since the 4th of November, a day before the presidential elections in the US.

Generally, the market tends to see volatility when a large number of traders are participating in trading activity, as it’s their trades that fuel price moves. Since the trading volume has slumped across the cryptocurrency sector recently, it’s possible that Bitcoin and others might see a state of calm in the near future.

The low activity may even be considered a sign that there is FUD in the market, which is something that has facilitated bottoms in the past.

BTC Price

At the time of writing, Bitcoin is trading at around $90,700, down almost 8% in the last week.

Looks like the price of the coin has been going down over the past day | Source: BTCUSDT on TradingView

Featured image from Dall-E, Santiment.net, chart from TradingView.com

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HONG KONG SAR – Media OutReach Newswire – 13 January 2025 – VT Markets, an award-winning financial services provider, today releases its 2025 Q1 Economic Outlook. The report highlights how the dual tailwind of favourable policies and market dynamics will propel the cryptocurrency sector into a new era of mainstream adoption. The report also underscores the transformative strides achieved by cryptocurrencies in 2024, which sets the stage for further growth in the upcoming year.

2024 As A Landmark Year for Cryptocurrency

With the conclusion of the 2024 U.S. Presidential election, cryptocurrencies have ascended from niche assets to mainstream investment products. Political developments, particularly arising President Trump’s re-election and his pro-cryptocurrency stance, acted as the main catalyst for this phenomenon. Participants observed Bitcoin’s price surging by over 40%, crossing $108,000 by year-end anticipating dovish policy shifts and renewed investor confidence towards the digital asset.

Key regulatory appointments, such as naming crypto advocate Hester Peirce as SEC Chair, signalled to the market a shift towards a more favourable regulatory framework, instilling optimism in institutional and retail investors alike.

The Rise of Spot Bitcoin ETFs

In early 2024, the U.S. SEC approved multiple spot Bitcoin ETFs; a significant breakthrough for the cryptocurrency industry then. By year-end, assets under management for these ETFs grew from $28.8 billion to $110 billion. Among them, BlackRock’s IBIT ETF stood out, achieving record-breaking $30 billion AUM in under 300 days.

This development not only validated cryptocurrencies as a mainstream investment class but also paved the way for wider institutional participation. The integration of cryptocurrency into traditional finance is seen as a key step toward standardisation – an issue which has plagued the industry since its inception.

Liquidity and Risk Appetite Fuel Growth

Macroeconomic conditions, including the Federal Reserve’s shift towards an easing monetary policy, contributed to increased market liquidity and higher risk asset valuations. Cryptocurrencies, known for their high-risk, high-reward profile, inevitably emerged as a preferred choice for portfolio diversification, further driving their adoption and price momentum.

2025 Will Be A Year of Regulatory Clarity and Technological Innovation

Looking ahead, the cryptocurrency sector is poised for greater regulatory clarity and broader market acceptance globally:

United States: Expected legislation on stablecoins and other crypto assets will a establish a clear regulatory environment.

European Union: The upcoming implementation of the Markets in Crypto-Assets Regulation (MiCA) will enhance transparency and compliance.

Asia-Pacific: Singapore and Hong Kong are set to strengthen their positions as regional crypto hubs, promoting Web3 development and reopening licensing opportunities for exchanges.

Emerging Markets: Countries like Brazil, the UAE, Australia, and South Africa are advancing efforts to legitimize cryptocurrencies, potentially becoming regional leaders in the sector.

A New Era for Mainstream Cryptocurrency Adoption

The VT Markets’ Research Desk suggests that the confluence of supportive policies, transparent regulations, and robust market conditions will accelerate the mainstream adoption of cryptocurrencies.

They believe that this transition from speculative assets to recognised investment products will be a pivotal moment in financial innovation.

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