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Trading volumes at South Korea's cryptocurrency exchanges have plunged more than 40% from the start of the year. With retail investors who drove last year's rally shifting en masse to the stock market and sentiment around Bitcoin failing to improve, the trading slump is becoming prolonged. While volumes briefly rebounded on a ceasefire agreement between the U.S. and Iran, analysts say market uncertainty remains.
According to cryptocurrency data platform CoinGecko on the 16th, Upbit's trading volume last month was $30.1 billion, down more than 40% from $51.5 billion in January. Upbit's monthly trading volume hit $52.1 billion in February before plunging to $35.8 billion in March, with the decline continuing in April ($33.8 billion) and May ($30.1 billion).
The trend is even more pronounced compared with the second half of last year. Upbit's average daily trading volume in the second half of last year was $2.52 billion. This year it has plunged 47.6% to $1.32 billion.
Bithumb's trading volume is also plunging sharply. Monthly trading volume, which was $20.1 billion in January, declined to $23 billion in February, then $15.3 billion in March, $15.4 billion in April, and $15.5 billion in May.
Analysts attribute this largely to retail investors who flowed in during last year's rally moving to other asset markets, including domestic stocks. Some investors also appear to have moved overseas around the recent record-sized SpaceX initial public offering (IPO). On the 12th, the day of the SpaceX listing, Upbit's trading volume was $800 million, down 25.9% from the prior seven-day average of $1.08 billion. Bithumb also fell 27.1%, from $480 million to $350 million. The two exchanges' average trading volume in the three days after the listing remained at just $1.34 billion, failing to recover to pre-listing levels.
However, the cryptocurrency market temporarily regained vigor the previous day on news of a ceasefire agreement between the U.S. and Iran. On the 15th, the combined trading volume of Upbit and Bithumb was $1.84 billion, up 46.7% from the prior seven-day average of $1.26 billion.
The industry sees it as uncertain whether this rebound will lead to a recovery in trading volume. The recent situation was largely driven by a short-term event, and on-chain indicators reflecting market strength remain weak. Global cryptocurrency research firm Swissblock analyzed that "the strength of Bitcoin's price movements and investors' actual market participation remain at bear-market levels."
Variables that could stir the market also remain. Even with the U.S.-Iran agreement, hurdles remain. The two countries plan to conduct additional negotiations over the next 60 days on matters such as the scope of nuclear program restrictions and conditions for easing sanctions on Iran.
The U.S. Federal Open Market Committee (FOMC) meeting is also a focus. The market sees a high probability that the Federal Reserve will hold the benchmark rate at 3.5–3.75%, but attention centers on what Fed Chair Kevin Warsh will say. An industry official said, "The possibility of a rate hike remains and global variables persist," adding, "Unless market uncertainty is completely resolved, a recovery in trading volume will not be easy to expect."
