Crypto Retreat has Taken a Big Toll on Crypto Exchanges in Q1: Report

Currently, the declining status of the crypto market is directly hitting crypto exchanges

The skyrocketing prices of cryptocurrencies in 2021 had given hope that the millions of crypto investors would definitely become millionaires by the end of 2022. But unfortunately, the crypto market failed to deliver. Instead, most investors are now underwater as crypto prices continue to decline exponentially, even after massive adoption. Earlier, investing in crypto was not only risky but also profitable. Cryptocurrency has always been a good form of investment asset for those who wish to take risks. But currently, the declining value of the crypto market has harmed investors immensely, who are now taking refuge in centralized assets or traditional domains of investment. Currently, Bitcoin is making headlines as it dropped below US$31,000, which is its lowest value since July 2021. Well, now if the 'Death Cross' warnings are true, then it is quite evident that more pain awaits the crypto market. Now, this declining status of the crypto markets is directly hitting the businesses of the crypto exchanges. In fact, global crypto exchange leader Coinbase warns its users that it is expecting lower revenues in its upcoming revenue report than its recorded revenues during the fourth quarter of 2021, which were already low.

Coinbase was set to record the earnings of its first quarter of 2022. But the exchange has already warned investors during the calculation of its fourth-quarter reports that it is expected further lower trading volumes and monthly transactions given the rising volatility in crypto assets and the persisting macroeconomic factors. Crypto market analysts and financial experts have stated that even though the market witnessed a few price swings towards the higher side, crypto activities have been steadily declining consistently, leading to minimal or no rise in the market volumes.

The weakening crypto market

The recent decline in the crypto market has demonstrated falling confidence among investors. The market has been suffering since the Covid lockdowns, in fact, Russia's Ukraine invasion has also adversely impacted Bitcoin and all other major cryptocurrencies, as the EU initially planned on banning Bitcoin. The market faced another blow when China shut down Bitcoin mining in its Sichuan province and further instructed its banks to stop supporting crypto transactions, with the rising crypto restrictions in the country. Apart from these, there are various reasons that govern the degenerating status of the crypto market, but investor sentiments also play a major part in this too. Growing fears over increased regulations and banning crypto transactions by several global governments have made investors choose various other investment assets.

How are crypto exchanges being impacted?

Several factors like rising global inflation, geopolitical crises, a shift in the US monetary policy, and others continue to adversely affect the crypto market. But these factors also directly affect the crypto exchanges. The consistent reduction of daily trading volumes and transactions has led crypto exchange leaders to believe that the worst is yet to come, which might actually be true. Nevertheless, as always suggested by market experts, investors should always be careful while exploring these untrodden domains. The current condition of the market is quite shocking; hence, it is best suggested to consult financial experts and consultants before further investing in cryptocurrencies or any other form of a digital asset.