During the brutal cryptocurrency selloff last month, volumes also tumbled — a development that doesn’t bode well for exchanges that trade the digital tokens.
Total spot volume slumped to $1.8 trillion in January, a decline of more than 30% from the previous month, according to a report from CryptoCompare. That was the lowest turnover since the end of 2020. Even at its intra-month peak of $91 billion on Jan. 24, trading was down nearly 50% from December.
“It’s just an exceptionally quiet, fearsome and uncertain time in crypto,” said Ed Hindi, chief investment officer and co-founder of Tyr Capital. “Smart money, as they say, doesn’t sleep, it doesn’t take holidays. But retail traders in crypto, they do take a break, especially when they get hurt,” he said, referring to an industry term for institutional and other bigger players.
The decline in trading volume will have a direct impact on revenues for Coinbase Global Inc. (ticker COIN) and Robinhood Markets Inc. (HOOD), according to Julie Chariell, a Bloomberg Intelligence analyst. Roughly 90% of COIN’s revenue and about 40% of HOOD’s are driven by crypto trading.