Why cryptocurrency market capitalization is growing, but trading volumes are falling

Crypto Terms 101: Basics (Volume , Market Cap , Supply) and more


  • Latest halving pushes bitcoin fees up 647%.

  • Crypto market capitalization has grown, but trading activity has decreased.

  • This may be due to hodling and the new currency staking fashion..

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At the end of the 2nd quarter, the capitalization of the cryptocurrency market showed a significant increase, although the overall trading activity decreased.

The analytical portal CoinGecko has recently published a new quarterly report on the situation in the cryptocurrency market. According to the results of this study, in the 2nd quarter of 2020, there was high activity on the bitcoin network (BTC), and the total capitalization of the crypto market grew significantly, despite the decrease in trading volumes..

And again about commissions

One of the interesting observations was also the data on the size of the commission for transactions with bitcoin. As it turned out, compared to the 1st quarter, the average BTC commission soared by a staggering 647%.

According to CoinGecko, between January and March, the average commission was about $ 0.70, but in the May 11 halving, the average skyrocketed to $ 4.53, up 6.5 times..

Earlier, the editors of BeInCrypto repeatedly talked about the dynamics of this indicator on the eve of halving and after it, and in June there were encouraging signs that the cost of bitcoin transactions began to stabilize at low levels..

However, according to the figures in the report, currently the average commission is settled around $ 1.08, which is still noticeably higher than the values ​​for the 1st quarter..

It is noteworthy that the growth of commissions was also observed in the network of the main competitor of bitcoin – Ethereum. However, here this phenomenon was not so consistent and was mainly concentrated in the segment of USDT transactions. In general, the Ethereum blockchain showed a high growth in activity in the 2nd quarter, which was largely due to the boom in the decentralized finance segment (DeFiDecentralized finance (DeFi) is financial services built on the basis of blockchain technology that offer users access to open, effective and … More).

So what happens to the cost of crypto transactions? Will they return to lucrative near-zero levels? Join the discussion in our Telegram channel – and you will find out everything!

Halving effects

Since the reporting quarter fell on the third halving, Bitcoin halving cuts the number of new coins created and earned by miners by half. This happens about every four years and … More on the bitcoin network, analysts have paid attention to its other consequences, in addition to the size of the BTC commissions. So, they noted that halving had a very weak effect on the hashrate and the cryptocurrency rate..

The hash rate, which is considered an indicator of trust and an indicator of the health of the entire BTC network, after halving for some time sank by 27%, but then recovered to its maximum values ​​within a month..

Why cryptocurrency market capitalization is growing but trading volumes are falling

Meanwhile, the price of bitcoin reacted relatively calmly to the halving, but in general showed a moderately bullish dynamics. In 50 days after the halving, the currency appreciated by 5%. For comparison, 50 days after the second halving of 2016, bitcoin fell by 9%.

What is a Crypto Market Cap?

Trading volumes VS staking

In general, the report reflected a positive picture of the crypto market. Thus, its total capitalization has grown significantly in the 2nd quarter by 44.5%. At the time of this writing, the cryptocurrency market capitalization was about $ 264 billion.

Quite expectedly, Bitcoin and Ethereum turned out to be the leaders in profitability among cryptocurrencies, with growth rates of 42.5% and 69.3%, respectively. In general, the average profitability of the top five cryptocurrencies to + 22.0% at the end of the quarter.

However, at the same time, the total trading volumes decreased by 55%. The indicator of trade volumes of the MTC decreased by 20% as compared to the 1st quarter. Experts explain this trend by the prevalence of the hodle mentality in the market, as well as the already mentioned explosive growth of the DeFi segment and the new fashion for staking currencies. According to the latest data, almost $ 10 billion worth of tokens are now in various staking contracts..

The boom in DeFi as a new direction led to an active migration of users to these new platforms, which led to a rapid growth in the capitalization of the stablecoin segment. In the second quarter, this figure soared by $ 3.65 billion, eventually exceeding the $ 11 billion mark. The lion’s share of this growth was due to aggressive issues of Tether, whose market capitalization increased by $ 3.38 billion.


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Why cryptocurrency market capitalization is growing, but trading volumes are falling
Why cryptocurrency market capitalization is growing, but trading volumes are falling
Why cryptocurrency market capitalization is growing but trading volumes are falling

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