The growth of the crypto ecosystem decelerated in January, with total trading volume dropping by 24%, according to a research report by Wall Street bank JPMorgan (JPM) released on Tuesday. The report, which cites TradingView data, highlights a decline in market activity despite an overall increase in the total market capitalization of digital assets.
Market Cap Growth Led by Bitcoin, Solana, and XRP
Despite the slowdown in trading volume, the total market capitalization of cryptocurrencies increased by 8% in January, reaching approximately $3.4 trillion. JPMorgan noted that this growth was primarily driven by gains in major assets such as Bitcoin (BTC), Solana (SOL), and XRP. However, the expansion was not evenly distributed across the market, as average daily volumes (ADV) saw broad-based declines throughout the ecosystem.
Post-U.S. Election Activity Still Elevated
While trading volume decreased significantly from previous months, overall activity levels remain double those seen before the U.S. election in November. This suggests that the market has maintained some momentum despite the recent downturn in ecosystem expansion.
Broad-Based Decline in Trading Volume
JPMorgan’s report highlights that the drop in ADV was widespread across the crypto landscape, affecting various assets beyond the top-performing ones. This decline in trading activity could indicate a more cautious approach among investors despite the broader market cap gains.
The mixed signals in the crypto market—rising total market cap but slowing ecosystem growth—suggest a shift in investor behavior. While leading assets like BTC, SOL, and XRP continue to see appreciation, the overall market appears to be consolidating after a period of heightened activity. Moving forward, market participants will likely keep a close watch on trading volume trends and macroeconomic factors influencing digital asset adoption.
