Bitcoin trading volume is down 35 percent in the past 24 hours. At the same time, the number of transactions on the Bitcoin blockchain has also dropped by 17 percent. The number of active addresses has dropped by 10 percent. What’s going on with Bitcoin?
25 versus $36 billion
While Bitcoin was still traded for an average of USD 36 billion per day last month, that dropped to USD 25 billion in March. “Along with a decline in Bitcoin price, we are also seeing a notable drop in volume across the entire ecosystem,” thus Guilhem Chaumont of Paris-based Flowdesk.
Chaumont adds that the drop in volume started with the news about Silvergate Bank. By many, Silvergate is (or was) seen as the bank of the crypto world, but there is not much left of that now.
In fact, today it was announced that the bank chooses to voluntarily liquidate its operation. This means that Silvergate Bank is probably not around for long and the story is over for this crypto bank.
According to Chaumont, the initial shock of this news has now been factored into the price and traders are now trying to better understand the situation. “It certainly gives a kind of ‘calm before the storm’ feeling. […] The confidence of the first two months of 2023 can certainly return,” said Chaumont.
Stablecoins more important?
With the collapse of Silvergate, there is another opportunity for stablecoins. Normally people could deposit dollars at the exchanges that cooperated with Silvergate. Due to the disappearance of the bank, this is no longer possible, making stablecoins a solution.
Instead of sending dollars to an exchange platform, people can simply buy stablecoins with their dollars from parties like Tether and then send them to the exchanges. For example, there are no actual US dollars on the exchange platforms anymore.
Stablecoins are popular, as evidenced by the trading volume that Tether (USDT) can provide for February and March. In February it tapped a volume of $47 billion per day and in March it was $32.3 billion per day. It even outclasses Bitcoin.