Daily Exchange Volume Fell Below $10B Starting Christmas Eve

Editing by Nathaniel Cajuday

• The daily spot market trading volume for cryptocurrency exchanges fell below $10 billion for the first time since December 17, 2020, according to The Block’s Data Dashboard.
• The drop in volume is likely due to the falling prices of most cryptocurrency assets and the loss of faith in exchanges following the collapse of FTX.
• The holiday season and a decrease in the number of daily active developers working on top blockchains and decentralized applications may also be contributing factors.

With the ongoing crypto winter, the daily spot market trading volume for cryptocurrency exchanges fell below $10 billion for the first time since December 17, 2020, according to The Block’s Data Dashboard.

As per the report from The Block, the seven-day moving average for daily exchange volume that went below 11 digits was recorded last:

• December 24 – $9.91 billion
• December 25 – $9.22 billion
• December 26 – $9.17 billion
• December 27 – $8.53 billion

In 2020, the below-$10 billion daily exchange volume was recorded during the time when the price of Bitcoin had surged past $20,000 for the first time. As of this writing, Bitcoin is down by 1.6% and trading at $16,609.70, according to CoinGecko.

Consequently, The Block noted that the drop is likely affected by several factors:

“The prices of most crypto assets fell throughout the year as the industry was hit with several meltdowns. BTC’s price is around where it was in late 2020 and ETH’s price has fallen to early 2021 levels. The 1-year price performance of BTC, ETH, and The Block’s DeFi Index are all below -60%. The negative price movement across the space would see USD volumes driven down.”

Moreover, the firm mentioned that the collapse of FTX also played a role in decreasing investors’ faith in cryptocurrency exchanges. But aside from the FTX, other major names in the crypto industry also suffered mishaps this year.

“It’s likely some users have paused their trading for now and withdrawn their assets from these centralized entities or began trading using more decentralized means. DEX volumes did see a strong showing in November amidst the turmoil. It also seems like the panic sell-off period that drove CEX volumes up mid-November as FTX was falling apart is now over,” it added.

In addition, The Block also noted that the holiday season may also be a factor that has slowed some activity this month, highlighting that “historically, we have seen drops in exchange activity in December, and rallies in volumes around the holidays seem to always be tied to positive price movements.”

Further, in the recent 2022 Rug Pull report of Solidus, the records showed that there were 117,629 tokens, created from January 1 to December 1, only aimed to scam investors, 41% higher compared to 2021’s 83,400 scam tokens. (Read more: From 83K to 120K: 350 ‘Scam Tokens’ Created Each Day in 2022, 40% Higher than 2021 — Report)

In another report, recorded data from the financial data platform Token Terminal found that the number of daily active developers working on top blockchains and decentralized applications (dapps) has decreased by approximately 57% this year. (Read more:  Report: Active Crypto Developers Decreased by Nearly 60% in 2022)

2022 Crypto Fiascos

OpenSea Phishing Attack (February)

With the ongoing rise of non-fungible tokens (NFT) in the crypto industry, the users of the largest NFT marketplace, OpenSea, suffered a phishing attack—a type of social engineering attack often used to steal user data—that happened to its users on February 19. 

According to its co-founder and CEO, Devin Finser, the attacker exploited the flexibility of their decentralized exchange protocol, Wyver Protocol, and stole 254 NFTs that cost $1.7 million in a span of three hours. (Read more: Phishing Attack on OpenSea Users Steals $1.7 million in NFTs)

Axie Infinity Hack (March)

On March 29, game developer Sky Mavis discovered the hack involving its blockchain game, Axie Infinity, which happened on March 23—nearly a week earlier—and reported that they had suffered an exploit on its systems, which led to the shutdown of its sidechain Ronin bridge and decentralized exchange Katana. (Read more: Axie Infinity Ronin Network Hack)

On April 15, the FBI reported that the North Korean hacking group Lazarus is behind the attack on the Ronin Network. However, the investigators did not expose how the attackers did the heist.

In a blog post, Sky Mavis revealed that the hackers managed to use the Axie Decentralized Autonomous Organization (DAO), a group set up to support the gaming ecosystem, to succeed in their attack: 

“The attacker found a backdoor through our gas-free RPC node, which they abused to get the signature for the Axie DAO validator.” (Read more: Report Suggests Elaborate Linkedin Job Offer Took Down Axie Infinity)

Luna and Terra Collapse (May)

The crash of Terra’s algorithmic stablecoin USDT, the largest stablecoin by market cap, and its crypto LUNA last May was considered one of the largest collapses in the industry. The fall of these coins resulted in $60 billion worth of losses. It was also one of the triggers for the global crypto winter. (Read more: Newsletter: What happened to USDT, UST, and LUNA | May 12, 2022)

After the crash, Terra CEO Do Kwon proposed revitalizing the Terra Blockchain by resetting the network ownership to 1 billion tokens. On May 28, Luna 2.0 was reactivated, then immediately fell to $5.98, or down more than 70%, after the blockchain Terra relaunched. (Read more: Luna V2 Price Pumps Then Dumps to $5 Immediately After Relaunch)

In September, Interpol placed Do Kwon under a red notice asking law enforcement agencies worldwide to find and arrest him. Prior to his notice, Terraform Labs employees—former and current—were sanctioned last June by the Seoul Southern District Prosecutor’s Office with a travel ban to eliminate the possibility of key officials fleeing abroad. (Read more: Interpol Issues Red Notice for Terra’s Do Kwon)

Three Arrows Capital Collapse (June)

Following the fall of Terra, cryptocurrency hedge fund Three Arrows Capital (3AC) also suffered unprecedented losses because of the recent decline in cryptocurrency market prices.

The crypto giant fell along with Terra because, according to the 3AC co-founder, they invested more than $200 million in the cryptocurrency LUNA, which definitely lost most of its value along with the collapse. (Read more: What is Three Arrows Capital? Investment Firm Confirms Loss from Luna and Terra Collapse)

FTX Crash (November)

Timeline of the FTX collapse covered by BitPinas:

• Binance CEO Changpeng Zhao (CZ) announced that it is set to liquidate its own FTX Tokens ($FTT) after a Coindesk article revealed that Alameda, FTX’s sister company, rests largely on FTT and not on any independent asset. [Read: Just House Cleaning: Binance To Liquidate Own FTX Tokens]
• CZ revealed that his company has signed a “letter of intent” to acquire FTX Exchange. [Read: BREAKING: Binance Signs Deal to Acquire FTX Exchange]
• FTT went into freefall and lost most of its value (about 80%) [Read: FTX Token Price Drops 80% as News of Binance Buying FTX Surface]
• CZ denied that there is any kind of “conspiracy” against FTX, or that he’s in a “fight” with its CEO Sam Bankman-Fried. [Read: Binance CEO Denies FTX Conspiracy]
• Binance backed out of its deal to purchase FTX because “the issues are beyond our control or ability to help.”[Read: Binance Will No Longer Acquire FTX]
• BlockFi files for Chapter 11 bankruptcy, weeks after the collapse of FTX, which previously signed a term sheet to provide credit to the embattled crypto lender last June. [Read: What Happened? BlockFi Files for Bankruptcy Amid FTX Crypto Contagion]
• The Bangko Sentral ng Pilipinas (BSP) has confirmed that it has asked locally licensed cryptocurrency exchanges about their exposure to FTX’s downfall, exchanges then clarified that none was affected by the downfall. [Read: Report: BSP Asks Local VASPs of FTX Exposure, Exchanges Respond]

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