Crypto spot trading volumes have dropped sharply in recent months, with activity across major centralized exchanges now back at levels comparable to mid-2024 in mid-2024 as traders scale back participation amid weaker liquidity and reduced retail interest.
Market data shows that spot trading volumes have fallen by around 50% from late-2025 highs, dropping from approximately $2 trillion in October 2025 to about $1 trillion by the end of January 2026. On-chain analytics firm CryptoQuant reported a clear decline in spot demand. As quoted by BitcoinKe, CryptoQuant analyst Darkfrost said “spot demand is drying up,” pointing to fewer active buyers and sellers across major exchanges.
Retail participation has also faded. Market surveys published in late 2025 showed Google search interest for “crypto” falling to around 10–15 on Google Trends’ 100-point scale, its lowest reading of the year, while the Crypto Fear and Greed Index stayed below 25, the threshold for “Extreme Fear” for several consecutive weeks.
Liquidity conditions remain strained. Stablecoin balances on centralized exchanges have continued to decline, reducing the capital available for spot trading and leaving order books thinner. More than $4 billion flowed out of exchanges, alongside an estimated $10 billion drop in total stablecoin market capitalisation, according to BitcoinKe.
Earlier liquidation events have added to the pressure. In October 2025, crypto markets recorded the largest single-day liquidation on record, with more than $19 billion in leveraged positions wiped out within 24 hours. Analysts said the scale of the event weakened confidence and prompted many traders to reduce leverage or exit positions.
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Although liquidation activity has eased since then, stress has not fully subsided. In late January 2026, more than $2.5 billion in leveraged positions were liquidated in a single day, reinforcing risk aversion in already thin markets. Macroeconomic factors have also weighed on sentiment. Reports from CNBC Africa pointed to expectations of tighter U.S. monetary policy, while market commentary on Binance Square highlighted increased caution following the nomination of a more hawkish chair to the Federal Reserve.
Justin d’Anethan, who oversees research at Arctic Digital, said the most immediate pressures on Bitcoin do not come from crypto-specific factors but from broader financial conditions, particularly uncertainty around U.S. monetary policy. He said the outlook has become more complex under Federal Reserve chair Kevin Warsh, whose hawkish approach could translate into slower or fewer rate cuts, a firmer dollar, and higher real yields, dynamics that have historically weighed on speculative assets, including cryptocurrencies.
At the same time, d’Anethan cautioned against writing off Bitcoin’s longer-term investment case. He said the idea of Bitcoin as a hedge against inflation and currency debasement has not disappeared, and argued that renewed ETF inflows, clearer pro-crypto regulation, or weaker economic data that forces policymakers to ease could still act as catalysts for a recovery.
“It might be a bitter medicine, but the recent move feels ultimately necessary and healthy to clear out leverage, tone down speculation, and force investors to reconsider valuations,” he said.
Lower trading activity has begun to affect crypto-related equities. CryptoNews reported sharp declines in shares of publicly listed crypto exchanges, while data cited by Yahoo Finance shows exchange valuations remain closely tied to transaction volumes. Analysts warn that thin liquidity could keep spot trading subdued. In a recent market note, analysts at Deriv said “relatively small trades can now move prices more aggressively than during periods of high participation,” a factor that may deter traders from returning.
For now, market participants say spot trading activity is likely to remain muted unless retail interest and liquidity recover. Market strategists say the current downturn reflects a market still adjusting after a long period of leverage and policy-driven optimism, with macro uncertainty shaping near-term expectations.
