CryptoQuant data shows that transfer volume, denominated in BTC, has fallen 35% over the last 24 hours. At the same time, the total number of transactions on the Bitcoin blockchain has decreased by 17% in the same period, and the number of active addresses has decreased by 10%.
For the month of March, bitcoin trading volume has come in at an average of about $25 billion, according to data from CoinGecko, compared to about $36 billion for the month of February.
“Along with the drop in the price of bitcoin, we have also seen a noticeable drop in trading volume across the ecosystem as news of Silvergate’s financial difficulties broke,” said Guilhem Chaumont, CEO of Paris-based market maker and brokerage Flowdesk. CoinDesk in a note.
Silvergate was one of the largest fiat payment rails in the crypto market, offering traditional banking services to exchanges and market makers. As such, trading volume has fallen since Silvergate’s problems became public.
Chaumont said trading since then has been quiet, suggesting the initial shock has been priced in as traders digest the situation.
“It definitely has a ‘calm before the storm’ feel to it. So the market doesn’t shake it off – FTX has made us all very aware that anything can happen,” he said. “However, the situation can still go either way – meaning that if news of a reassuring resolution came, the confidence that characterized the first two months of 2023 could return.”
Silvergate’s demise may accelerate the shift towards trading pairs denominated in the dollar-pegged stablecoins like tether (USDT).
“With the demise of Silvergate, stablecoins are likely to become even more ubiquitous among traders. Instead of depositing your dollars with an exchange, you deposit them with a stablecoin issuer, receive stablecoins and then transfer them to an exchange,” analysts at Paris-based . Crypto data provider Kaiko said so in a note on Monday.
Most of the trading volume is already concentrated in USDT pairs. Data tracked by Kaiko shows that BTC/USDT pairs account for over 90% of trading volume, up from 3% in 2017.
At the same time, the number of new crypto-USDT pair listings has been decreasing.
USDT daily volume is currently averaging $32.3 billion per day so far in March, according to CoinGecko data, down from an average of $47 billion per day in February.
Omkar Godbole contributed reporting.