The crypto ecosystem experienced a notable slowdown in growth during January, as detailed in a recent research report by Wall Street bank JPMorgan. According to data from TradingView, total trading volume dropped by 24%, indicating a significant shift in market dynamics.
Despite this decline, trading activity remains robust, being double the volume recorded prior to the U.S. election in November. Furthermore, the total market capitalization of the crypto sector rose by 8%, reaching approximately $3.4 trillion. This growth was particularly concentrated among leading cryptocurrencies such as bitcoin (BTC), solana (SOL), and XRP. However, the report also highlighted that declines in average daily volumes (ADV) were widespread across the broader ecosystem.
Analysts at JPMorgan, led by Kenneth Worthington, suggested that the recent U.S. election served as a catalyst for this increased activity. They noted that both trading activity and token price levels are now seeking an equilibrium in the post-election landscape.
In terms of specific sectors within the crypto world, decentralized finance (DeFi) and non-fungible tokens (NFTs) experienced even greater challenges, with several metrics showing a marked deterioration month-over-month.
On a more positive note, the regulatory landscape has seen some progress. The new Trump administration has established a new crypto task force, and the controversial accounting rule known as SAB 121 has been rescinded, according to JPMorgan.
For further insights, read more: Equities-Crypto Relationship Is Likely to Weaken in the Long Term, Citi Says.
