Bitcoin trading volumes experienced a notable decrease in April, coinciding with ongoing discussions surrounding stablecoin regulation and broader economic factors. The decline follows a period of considerable inflows into Bitcoin ETFs, highlighting the volatile nature of the cryptocurrency market.
According to Coin Gecko data released Thursday,the average Bitcoin trading volume in April was $33.7 billion. this represents a 36.77% decrease from January’s average of $53.3 billion. The downward trend has been consistent throughout the year, with February recording $51.1 billion and March registering $34.7 billion.
Tether (USDT), a leading stablecoin, also saw a reduction in trading volume.April’s volume was $46.6 billion, a 30.55% drop from January’s $67.1 billion. February and March recorded $64.3 billion and $49.5 billion, respectively.
Other major cryptocurrencies, including Ethereum, Ripple (XRP), solana, and ADA, also experienced lower trading volumes last month. These declines suggest a widespread trend across the virtual asset market.
Market analysts suggest that concerns over potential interest rate cuts due to U.S. inflation and the imposition of mutual tariffs have contributed to investor caution. Shinhan Investment & Securities noted a 40% correlation coefficient between Bitcoin and U.S. technology stocks, indicating that declines in the tech sector, influenced by tariff concerns, have impacted cryptocurrency values. The horror greed index, a measure of investment sentiment, fell to a low of 15 last month, signaling significant market apprehension.
Stablecoins, designed to mitigate volatility by linking their value to traditional currencies or assets like gold, are facing increased regulatory scrutiny. Tether, a dollar-based stablecoin, holds a significant market share. While some view stablecoins as a “proven digital dollar” and an alternative to central bank digital currencies (CBDC), regulatory bodies are considering legislation to address potential risks.
The Genius Act and other related bills are currently under consideration in the Senate. These legislative efforts aim to establish a framework for stablecoin regulation. The House of Representatives is considering legislation that would prohibit interest provisions and restrict algorithmic stablecoins, reflecting a conservative approach. Republican-led initiatives propose allowing interest accrual and further research into algorithmic stablecoins. Despite differing approaches, bipartisan consensus on the need for stablecoin regulation suggests the possibility of legislation passing this year.
Despite the trading volume decline, Bitcoin has shown resilience, rebounding to over $97,000 in recent months. Bitcoin ETFs have also attracted significant investment. According to Pacaid investors, U.S.-listed Bitcoin ETFs saw net inflows of $39.5 billion in the two weeks between April 14 and May 1. Ethereum ETFs also experienced inflows of $2.5 billion during the same period.
Park Woo-yeol, a researcher at Shinhan Investment & Securities, suggests a cautiously optimistic outlook.”In the second quarter, the atmosphere of the virtual asset market is laying down and rebounding,” Park said.
