Is Crypto Losing Its Spark? Market Volume Shrinks by 60%

Market conditions remain fragile, with trading activity on a sharp decline. CoinGecko reports that as of March 12, daily trading volumes stood at just $160 billion, a dramatic 60% drop from the local high of $440 billion seen on February 4. Analysts note that even minor price rebounds have failed to boost trading volumes, reinforcing concerns over market sentiment.

According to Santiment, the current phase is characterized by “a mix of exhaustion, despair, and capitulation,” following a staggering $900 billion decline in market capitalization since the start of February—a 26% downturn. With demand lagging, analysts warn that any short-term recovery could lack the strength to sustain itself. 

Shrinking volume during minor rebounds isn't necessarily a direct bearish signal, but volume is a metric that measures participation from both retail and institutional traders. If both groups are waiting for the other to boost market caps in order to make their next moves, it can lead to price stagnancy with little movement (and a slight tendency to veer toward the downside),

Santiment’s analysts remark.

Bitcoin at a Crossroads: Can It Break the Downtrend?

Technically, the market is walking a fine line. Analyst Matthew Hyland warns that unless Bitcoin secures a weekly close above $89,000, the downtrend remains intact, opening the door for a potential drop to $69,000–$74,000. Such a move would put significant downward pressure on altcoins and the broader crypto space.

Other technical readings reinforce this risk, with Bitcoin forming a clear pattern of lower highs and lower lows—a textbook sign of a persistent downtrend. Adding to the concern, Bitcoin is hovering around key support zones, including the all-important 200-day moving average, a level that has historically dictated bullish or bearish momentum.

Crypto on Edge: How Macroeconomics Could Trigger More Volatility

The interplay between macroeconomic trends and the crypto market remains significant. February’s inflation data came in lower than anticipated, with consumer prices rising 0.2% and the overall inflation rate at 2.8%. While this initially drove a 2% increase in Bitcoin’s price, as well as gains in altcoins, the positive momentum proved to be fleeting.

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David Siemer, CEO of Wave Digital Assets, warns that ongoing economic disruptions—including escalating Trump trade wars and new tariff barriers—could shake investor confidence even further, amplifying volatility across both crypto and traditional financial markets.

An intriguing AI-driven analysis from the pseudonymous expert Chicken Genius, using the Claude 3.7 model, has revealed a striking correlation between Bitcoin’s price and the global M2 money supply.

The model suggests that changes in monetary policy ripple through the crypto market with a two-month delay, creating a potential forecasting advantage for investors. This finding highlights the growing relevance of macroeconomic data—including the role of spot Bitcoin ETFs—particularly as uncertainty continues to grip global financial markets. 

The crypto market is in the eye of a storm—a volatile mix of price swings and global economic pressures that leave investors on edge.

As trading volumes dry up and warning signs mount, the risk of further price declines looms large. Navigating this uncertainty requires caution, a sharp focus on key support zones—most notably Bitcoin’s $89,000 level—and an understanding of how macroeconomic trends are influencing digital assets.

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