As of March 21st, 2023, Eastern European Time, the spot trading volume of altcoins on centralized exchanges has seen a drastic decline from its peak, with market liquidity evidently cooling down. According to a single statistical measure, the current daily trading volume of Binance altcoins is approximately 7.7 billion USD, while other major exchanges combined account for around 18.8 billion USD, which is significantly reduced compared to the hundreds of billions seen during peak periods in February and October 2025. Behind this change, on one hand, the bear market and global geopolitical uncertainties have systematically shrunk risk appetite, with funds concentrating towards high liquidity assets such as Bitcoin; on the other hand, historical experiences remind investors that low trading volumes and cold sentiments often accompany medium to long-term layout windows. This contradiction of "surface cooling, inherent divergence" is becoming a key observation point in the current altcoin market.

From 50 billion to 7 billion: Altcoins

Recent data shows that the trading activity of altcoins on centralized exchanges is rapidly declining. Taking Binance as an example, during the peak periods in February and October 2025, the daily spot trading volume of altcoins once reached a range of 40 billion to 50 billion USD, reflecting strong investor enthusiasm for small to medium market cap assets at that time. However, as of now, the Binance altcoin daily trading volume has shrunk to approximately 7.7 billion USD, which is merely a fraction of what it was at its height, with turnover heat and short-term speculation evidently cooling.

In a cross-comparison with other major exchanges, the contraction is similarly significant. According to the same data measure, the total daily trading volume of altcoins on other leading platforms has dropped from a peak of around 63 billion USD to the current around 18.8 billion USD, representing a total shrinkage of over 60%, indicating that this is not a problem isolated to specific platforms, but rather a structural retreat across the entire market. This latest round of declining trading volume, coupled with weak price performance, highly corresponds to the current phase widely defined as a bear market, where speculative funds retreat, leverage clears out, and new capital hesitates, collectively compressing trading demand.

It is essential to emphasize that the aforementioned trading volume data comes from a single statistical source, and does not encompass all trading scenarios and off-market liquidity. There may be discrepancies between different platforms and statistical measures, so these figures are more suitable as references for observing trends and magnitudes, rather than absolute characterizations of the liquidity of the entire cryptocurrency market. Extrapolating them as a “market-wide conclusion” carries risk, and investors should maintain caution in their interpretations.

Risk Appetite Contraction: Funds Concentrate on Bitcoin

Alongside the contraction in trading volume, the market consensus that "altcoins continue to underperform Bitcoin" is strengthening. CryptoQuant analyst Darkfost points out that amidst the current bear market and global geopolitical uncertainty, altcoins are consistently underperforming Bitcoin, and this difference reflects a repricing of fund structure and risk appetite: investors are retreating from the high volatility and high uncertainty of the altcoin sector, refocusing on mainstream assets with better liquidity and consensus foundation.

During times of rising macro uncertainty, the market places more importance on an asset's shock resistance and realization speed, with Bitcoin exhibiting characteristics of being a "liquidity safe haven" due to its size, depth, and institutional participation advantages. In comparison, most altcoins are clearly lacking in fundamental verification, institutional participation, and market consensus; once sentiment cools, liquidity discounts can be rapidly amplified, and funds naturally tend to concentrate on major assets like Bitcoin, resulting in a structural migration of "the strong get stronger, and the weak retreat".

As trading volumes decline, the market cap share of the altcoin sector is also likely to face pressure: shrinking trading volumes imply a receding pricing power, and assets lacking continuous buying support are more susceptible to compression in price and valuation, resulting in an overall decline in the sector's weight. This change is not due to sudden reallocation by a few institutions, but rather is a spontaneous choice of funds under the broad downgrade of risk appetite. Due to the lack of verified detailed holding and reallocation data, it is impossible to provide a nuanced description of specific institutional behaviors; one can only infer that this structural adjustment is underway at the level of overall fund preferences and relative performance.

Historical Experience: Low Trading Often Remote

Looking back at previous cycles in the cryptocurrency market, a relatively stable experience is: high trading volumes often approach phase tops, not bottoms. The general market view is that when prices soar and sentiment reaches extremes, chasing high prices, leveraging, and short-term funds flood in, pushing trading volumes to extreme ranges, which simultaneously implies that future buying "ammunition" has been largely overdrawn; once favorable conditions are realized or expectations fall short, a rapid reversal is likely. In contrast, phases closer to the bottom often see low trading, low heat, with only patient funds and some left-side allocators remaining involved.

Within this cyclical framework, the current dramatic decline in altcoin trading volume and the evident cooling of on-chain and off-chain sentiment likely indicate that short-term speculation based on emotion and narrative has largely retreated, with the proportion of speculative positions decreasing. Historical experience shows that although this kind of environment may feel "cold", it often corresponds to an area where valuations and cost-effectiveness gradually improve in a medium to long-term perspective—excellent assets begin to recede from “story premium” to prices closer to fundamentals, expanding the gambling space for long-term participants.

However, a decline in trading volume does not automatically equate to having "hit bottom". It is more a signal of changing probabilities and cost-effectiveness: marginally, new capital is more likely to obtain better prices and asset quality during low-heat phases, but this does not rule out the possibility of prices continuing to dip or oscillate around a range. Due to the lack of certain information regarding future macro, policies, or marginal fund flows, it is impossible to provide temporal or pinpoint predictions for "when a reversal will happen" or "at what price the bottom will be," hence investors must leave ample safety margins and uncertainty space while utilizing historical experience.

Macroeconomic Wind Shift: Gold Plummets

While altcoin trading is cooling down, notable shifts in the macro market have also emerged. Recently, gold recorded its largest single-week drop in 43 years, with a decrease of 10%—11%, breaking its traditional image of "steady movements". During the sharp decline in gold prices, two major whale addresses collectively sold approximately 13.17 million USD worth of XAUT tokens, indicating that even assets known for their safety can encounter substantial capital outflows and liquidity shocks during extreme volatility.

The significant fluctuations of traditional safe-haven assets are linked to a rising risk appetite contraction in the cryptocurrency market on an emotional level. On one hand, gold’s steep decline has reinforced investors' perception of macro uncertainties and systemic market volatility, heightening risk-averse sentiments; on the other hand, when so-called "safe-haven assets" also experience rare tremors, capital tends to prioritize cutting down on high-risk exposures, favoring the protection of liquidity and principal safety—altcoins, which are more volatile and have weaker pricing anchors, naturally become some of the first targets to be reduced or abandoned.

From an on-chain perspective, the expansion of real-world yield-bearing assets also reflects a cautious tone. Currently, there are only about 34 assets of this kind with scales exceeding 50 million USD, indicating that although RWA and yield-bearing assets are viewed as “high-quality, low-volatility” new directions, capital remains restrained in actual allocations, preferring to concentrate on a few proven targets rather than broadly spreading risks. This trend aligns with the retreat of altcoin speculation and capital valuing security and certainty more heavily.

It should be noted that these macro and on-chain signals are more a side reflection of rising risk aversion, rather than direct trading guidance. The plummet in gold prices, the massive sell-off of XAUT by whales, and the increased concentration of RWAs do not simply suggest the short-term price movements of any particular altcoin, but collectively sketch a backdrop: at this stage, the market is generally more inclined to "do less, make fewer mistakes," with a noticeably reduced tolerance for high-risk assets.

Investors in a Bear Market: From Chase to

In the earlier bull market phase, the typical characteristics of the altcoin market included high turnover, high leverage, and a prevalence of short-term speculation. New projects would be quickly hunted by capital, with daily fluctuations of dozens of percentage points not uncommon; contract trading with high leverage was booming, augmented by the emotions of social media, with FOMO driving a large number of chase buyers and "doubling down in hours" speculative games. In this model, trading volume itself was both fuel for accelerating prices and a mirror for bubble accumulation.

In the current bear market environment, investor behavior has clearly shifted towards defense. Funds are increasingly opting to hold Bitcoin and cash positions, reducing altcoin exposure to lower levels to cope with potential further volatility and macro risks. Bitcoin, due to its "blue-chip" status among crypto assets, is viewed as relatively more manageable during uncertain times while still maintaining a degree of liquidity for reassessing risk asset allocation once the macro or policy environment becomes clearer.

As heat fades and price volatility converges, participants' interest in altcoins has significantly cooled, with the proportion of purely story-driven speculation decreasing and the demands of long-term capital for project fundamentals and sustainability rising. In a low trading environment, projects lacking clear application scenarios, cash flow support, or stable communities are more likely to be marginalized, whereas assets with clearly defined leading and long-term logic stand to gradually consolidate positions.

For individual investors, the main risk in this environment is no longer merely "price volatility," but rather liquidity risk and trading costs. When trading is thin, large buy and sell orders can significantly impact prices, magnifying slippage and increasing execution difficulties for stop losses, reallocations, and profit take-ups. If one continues to focus solely on price curves with a bull market mindset, while neglecting depth, order book structure, and actual transactable scales, the real risk exposure may vastly exceed expectations; therefore, in a low trading environment, liquidity should be regarded as equally important a consideration as price.

After the Trading Ice Point: Can Altcoins Still

In conclusion, the trading volume of altcoins on centralized exchanges has slid from the hundreds of billions during peak periods down to several tens of billions currently, reflecting a deep contraction in risk appetite and a reconfiguration of fund structure. Speculative capital and leveraged positions are withdrawing, trading volumes are plummeting, and funds are converging on assets with greater liquidity and consensus like Bitcoin; the overall weight and bargaining power of the altcoin sector is simultaneously weakening, painting the basic picture of the current stage.

This environment does not have a singular implication: on one hand, deteriorating liquidity, increased slippage, and higher exit difficulties indeed elevate the risks of holding altcoins; on the other hand, cooling sentiments and valuation contractions also objectively improve the cost-effectiveness and safety margins for medium- to long-term participation. For long-term capital capable of conducting research and withstanding volatility, ice-point trading may not be the only exit option, but could also serve as a starting point for selecting quality targets and phased layouts, albeit with higher requirements for position and pace.

From a strategic perspective, a more reasonable approach is to start from risk management and position control, rather than betting on a specific asset or singular point of reversal. This includes: controlling the overall altcoin position ratio to avoid excessive concentration in a single sector or specific tokens; maintaining caution with varieties that exhibit clear liquidity shortages, reserving space to withstand extreme volatility and extend holding periods; and distinguishing between “experimental positions that can go to zero” and “long-term capital that requires steady appreciation” to achieve structural layering in account management.

No matter what strategy is adopted, continuously tracking changes in trading volume and fund flows remains one of the key tools for identifying sentiment turning points and structural changes. Trading activity may not provide precise bottom signals, but its marginal changes—volume expansion, contraction, and structural rotation—often reflect the subtle shifts in market preferences ahead of price movements. At a time when altcoin trading has suddenly cooled, understanding these changes in volume and structure may be more important than predicting the exact timing of the next major market event.

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