Bitcoin Is In a Slumber. What Could Jolt It Awake.

By almost any measure, crypto fatigue has settled in. Prices have flatlined, trading volume has collapsed, and hardly anyone outside the industry seems to care about crypto anymore. Google searches for Bitcoin are off 87% from their peak in 2021. Searches for “cryptocurrency” are down 96%.

One way to see how crypto has gone quiet is trading volumes. Centralized exchanges like Coinbase and Binance are handling around $30 billion a day, less than half their levels a year ago and about 15% of the roughly $200 billion in daily volume when Bitcoin was flying high in 2021, according to CoinMarketCap.

The waning volume is causing knock-on effects. Market makers that supply liquidity and often trade against retail investors are stepping back. Jane Street and Jump Capital, two of the largest market makers, have curtailed activity in the U.S., according to people who do business with the firms. Neither company responded to requests for comment.

The cost of large block trades has risen faster than that of small amounts, according to CoinRoutes’ Weisberger. But retail traders could start to notice higher costs too. PayPal Holdings ’ Venmo service, which offers crypto trading, plans to double spreads to 1%, starting October 23, a move that’s tantamount to a fee increase of 0.5 percentage points.

With ChatGPT, “you saw an immediate use-case. There’s a little bit of ‘Why don’t we have that in crypto?’ ” says Christopher Jensen, head of digital assets research at Franklin Resources , which is trying to launch a Bitcoin ETF and has other crypto ventures in the pipeline. A few events on the horizon could rekindle crypto. One would be approval of a spot-based Bitcoin ETF, says Digital Asset Research CEO Doug Schwenk. A federal court last month ruled against the Securities and Exchange Commission, saying it erred in rejecting Grayscale’s bid to convert the Grayscale Bitcoin Trust into an ETF.

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