Last Month's Cryptocurrency Trading Volume Drops Over 40%... Impact of China's Crackdown

Impact of ESG Boom and Regulatory Authorities' Actions

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] As the decline in cryptocurrencies continues, it has been revealed that cryptocurrency trading volume dropped by more than 40% last month.

On the 12th (local time), CNBC cited cryptocurrency information firm CryptoCompare, reporting that the trading volumes of major cryptocurrency exchanges including Coinbase, Kraken, Binance, and Bitstamp fell by over 40% last month.

CryptoCompare attributed the decrease in trading volume to the drop in cryptocurrency prices and reduced volatility.

According to CryptoCompare, the price of Bitcoin, a representative cryptocurrency, fell to $28,908 per coin last month and closed the month down 6%.

The highest daily trading volume in June, $138.2 billion on the 22nd, represents a 42.3% decrease compared to the highest daily trading volume in May.

CryptoCompare pointed to the large-scale crackdown by Chinese authorities as a key factor behind this sluggish trading.

Previously, Chinese authorities banned all financial institutions from providing any cryptocurrency-related financial services and imposed a nationwide ban on cryptocurrency mining.

Teddy Verlaine, Chief Investment Officer (CIO) of hedge fund Per Valley Global, said, "China's crackdown has caused a lot of fear, and that is showing in the market," adding, "The digital asset ecosystem took a punch in the face, so instead of fighting in the middle of the ring now, it is leaning against the ropes."

Additionally, amid the global surge in ESG (Environmental, Social, and Governance) investments, critical voices against cryptocurrency mining due to its high power consumption have spread, and regulatory authorities worldwide have begun to act on the potential illegal use of cryptocurrencies, which also affected the decline in trading volume.

Cryptocurrency specialist analyst Nick Mancini said, "Due to these factors, cryptocurrency trading volume has dropped by nearly half from its peak."

However, CNBC reported that cryptocurrency investors and experts still view the long-term outlook for Bitcoin and other cryptocurrencies positively.

Clara Medalli, a researcher at cryptocurrency market analysis firm Gaiko, emphasized, "Cryptocurrency trading volume is still higher than last year," adding, "It is just a return to the trading volume level seen earlier this year."