Spot crypto volumes plunge 50% in three months as liquidity dries up across major exchanges

Spot cryptocurrency trading volumes have fallen roughly 50% since October, dropping from approximately $2 trillion to $1 trillion by the end of January and marking the lowest activity levels since 2024, according to market data firm CryptoQuant.

The sharp contraction follows an October 10 liquidation event that wiped out leveraged positions and triggered a sustained decline in spot market participation across major exchanges including Binance, analysts say.

Market backdrop: sharp contraction in spot volumes

According to market data and analytics firm CryptoQuant, this contraction has pushed activity to figures last seen in 2024, a trend analysts has linked it to declining liquidity and waning investor demand.

CryptoQuant’s Darkfost, an analyst at the firm, described the slowdown in clear terms.

“Spot demand is drying up, and has been largely driven by the Oct. 10 liquidation event.”

This retreat in trading activity coincides with broader market weakness, with Bitcoin’s price down significantly from recent highs and liquidity on exchanges drawing down as stablecoins exit trading venues.

What the data shows: retreat to 2024 activity levels

Detailed exchange data reveals spot trading volumes on centralized platforms contracting from around $2 trillion in October to about $1 trillion by the end of January.

The drop is not uniform across markets. For example, data from CoinGecko and other aggregators suggest a near-collapse in daily spot volumes, with major exchanges like Binance seeing marked declines in Bitcoin and Ether trades.

Market observers point to weakening participation in spot markets, often seen as a barometer of genuine investor interest.

According to CryptoQuant, this contraction has brought the market back to levels among the lowest observed since 2024, suggesting a clear disengagement from investors.

Macro pressures and investor sentiment

Analysts link the trading volume downturn to broader macroeconomic pressures. Uncertainty over monetary policy, including expectations around U.S. Federal Reserve rate decisions.

Also, stronger dollar conditions and high real yields, has pressured many risk assets, including cryptocurrency.

“Uncertainty around Kevin Warsh’s hawkish stance as Fed Chair could mean fewer or slower rate cuts, a stronger dollar, and higher real yields, which all pressure risk assets, including crypto.” Justin d’Anethan, head of research at Arctic Digital, told Cointelegraph.

The weakening demand on spot venues also mirrors broader market sentiment indicators that have shown bearish shifts.

CryptoQuant’s Bull–Bear Index, for example, recently flashed its first bearish signal since mid-2024, reflecting deteriorating on-chain and trading volume momentum.

Trading Implications

The contraction in trading volume carries several implications such as;

• Liquidity risk: Lower spot activity can widen bid-ask spreads and make markets more susceptible to large price swings. Analysts already note signs of diminishing liquidity as stablecoins and other capital leave exchange order books.
• Shift to derivatives: Some traders may reallocate toward futures and options markets, where volume and open interest have held stronger year-over-year, although this may not reflect genuine demand for underlying assets.
• Sentiment indicator: Persistently low volumes often point to caution or bearish sentiment among retail and institutional participants alike. It is potentially slowing price recoveries or amplifying sell-offs if catalysts fail to materialize.

Outlook: what comes next

While the current volume contraction resembles past cyclical downturns, markets may still find support if macro conditions improve or regulatory clarity increases.

Some institutional research reports suggest crypto adoption continues in specific regions and sectors despite short-term volatility.

However, the immediate signal remains one of caution: retreating volumes back to 2024 levels suggest a pause in investor engagement that could persist until clearer drivers.