Bitcoin and Ethereum Fluctuate—What Caused the Decline in Trading Activity?

Cryptocurrency Market Faces Volatility Amid Lower Trading Activity

The digital asset market experienced fluctuations on Friday as trading activity slowed, with both Bitcoin and Ethereum losing ground despite earlier gains in the week.

After Bitcoin surged to $94,600 on Wednesday, the top cryptocurrency by market cap was trading near $95,300, marking a 4.6% rise over the past week, according to CoinGecko. During the same period, Ethereum advanced 5.9% to reach $3,250.

Meanwhile, data from CoinGlass showed that trading volumes for Bitcoin and Ethereum dropped by 27% and 32%, respectively, falling to $65 billion and $54 billion. This downward trend in trading activity was also seen in other major cryptocurrencies such as Solana, XRP, and Dogecoin.

The decline in market activity followed Coinbase’s decision to retract support for a crypto market structure bill, after weeks of lobbying efforts in Washington. This move came amid growing friction among Democratic lawmakers regarding the Securities and Exchange Commission’s approach to regulating crypto companies.

“I remain confident that this legislation will ultimately pass with strong bipartisan backing,” said Coinbase CEO Brian Armstrong during an interview on Fox Business. “While I’ve acknowledged certain concerns, I’m leaving the specifics of the process to the Senate moving forward.”

On Thursday, several analysts criticized the SEC in a letter addressed to Chair Paul Atkins.

Carlos Guzman, a research analyst at crypto trading firm GSR, told Decrypt that there had been significant optimism about the CLARITY Act passing this year. “The market rally seemed to align with the release of a new version of the bill,” he noted.

Although the Senate Banking Committee postponed its review of the bill on Wednesday, Guzman highlighted that other factors could be influencing the market, such as rising geopolitical tensions in the Middle East due to protests in Iran and former President Donald Trump’s campaign pressuring the Federal Reserve.

Federal Reserve Chair Jerome Powell warned that the White House was attempting to interfere with the central bank’s independence, following reports of Justice Department subpoenas related to his testimony about a multi-billion dollar renovation of the Fed’s headquarters. Guzman observed that while equities declined, both cryptocurrencies and precious metals saw gains.

Senate Banking Committee Delays Markup of Key Crypto Bill as Industry Support Frays

Since the start of the week, spot Bitcoin ETFs have attracted steady inflows, amassing $1.8 billion over four days, according to CoinGlass.

Institutional Investors Drive Recent Market Activity

Jasper De Maere, a strategist at crypto market maker Wintermute, commented in a Thursday note that most of the recent trading has been concentrated among institutional players, particularly on Wall Street.

“Retail participation has been minimal, with trading volumes remaining muted even as prices rise,” he wrote. “While Bitcoin’s renewed media attention may change this, the current rally has largely been fueled by institutions and ETFs.”