Crypto Spot Trading Slows in April

Cryptocurrency spot trading cooled last month for the first time in seven months.

It was a trend driven by a dwindling likelihood of interest rate cuts and slower inflows into U.S.-listed spot bitcoin exchange-traded funds (ETFs), Seeking Alpha reported Saturday (May 18), citing numbers from researcher CCData.

According to that data, spot market volume on exchanges such as Coinbase, Binance and Kraken fell by 32.6% to $2.01 trillion in April, while monthly derivatives trading volume declined by 24.1% to $4.57 trillion, its first drop in three months. 

“This decline followed unexpected macroeconomic data, an escalation in the geopolitical crisis in the Middle East, and negative net flows from U.S. spot Bitcoin ETFs, leading major crypto assets retracing the gains they made in March,” CCData said.

Last month also saw bitcoin drop by almost 15%, falling below $60,000 and breaking a seven-month hot streak that included a record high of more than $73,000 in March.

As the report noted, this run was driven primarily by speculation surrounding last year’s regulatory approval of spot ETFs and the bitcoin halving event.

Last week, crypto custody firm Bakkt said that the Securities and Exchange Commission’s (SEC) approval of bitcoin ETFs will lead institutional investors to play a larger role in the cryptocurrency trading market.

The company’s earnings showed that in the first three months of the year, crypto trading volume climbed 324% compared to the prior quarter, “driven by exceptionally strong client trading activity,” the presentation said.

“As evidenced in our trading volumes in Q1, we’ve begun to see positive green shoots in the market and the overall demand environment improving, with more industry activity, higher coin prices and overall higher retail trading volume,” Andy Main, president and CEO of Bakkt, said during the company’s quarterly earnings call.

The institutional investors in this market are seeking a purpose-built crypto trading platform that will align with their needs and priorities, rather than the existing trading market that was built primarily for retail investors, Bakkt’s presentation said.

“The crypto trading industry has been built primarily for everyday retail investors who use a central limit order book trading structure,” Main said. “Meanwhile, institutional investors who are offering bitcoin ETFs are increasingly finding that the retail central limit order book structure is not meeting their large-scale needs.”