Despite the stock market surge, the crypto market faces a cold snap. When will Upbit's liquidity drought end?

▲ 'Static market' amid sharp drop in trading volume... Upbit market holds its breath. Bitcoin, XRP, and other major altcoins in a wait-and-see market/AI generated image ©

Despite the New York stock market rising across the board due to receding interest rate hike expectations following worsening employment figures, and the Standard & Poor's (S&P) 500 index hitting an all-time high, the domestic cryptocurrency market, in contrast, is showing a slight downward trend amid an severe trading drought.

According to Upbit, the largest cryptocurrency exchange in Korea, as of 8:20 AM KST on August 8th, Bitcoin (BTC) was trading at 91,253,000 KRW, up 0.01% from the previous day, barely defending the 91 million KRW line. Despite the possibility of the Federal Reserve (Fed) freezing interest rates in September soaring to 56% in the New York stock market, reviving risk asset preference, no warmth is being conveyed to the domestic crypto market.

The overall deterioration in market sentiment is clearly evident in the drought of trading volume for major coins. The Upbit Composite Index recorded a 0.28% decrease to 9,380.95, and the Altcoin Index fell 0.75% to 2,363.38. Trading volumes for top market capitalization assets, such as Ethereum (ETH) trading down 0.30% at 2,695,000 KRW and XRP (Ripple) down 2.11% at 1,436 KRW, have sharply contracted. Bitcoin's 24-hour trading volume also remained at around 51.4 billion KRW, indicating a deepening liquidity exhaustion.

According to Upbit Datalab, Upbit's 24-hour trading volume slightly increased by 8.53% from the previous day, reaching 795.418 billion KRW, but it still fails to break the '1 trillion KRW' barrier, continuing the severe trading drought. The exchange is successively introducing newly listed coins to overcome the decrease in trading volume, but it's proving insufficient. Although newly listed Blockstreet (BSB) rose by 6.85% and Camino Finance (KMNO) ranked high in trading volume, they show limitations in boosting overall market liquidity.

The reason the crypto market is in a downturn despite the stock market surge is that global macroeconomic tailwinds have failed to open the floodgates for funds to flow into the cryptocurrency market. As investors' funds are concentrated in traditional asset markets like stocks, new inflows into the crypto market have stagnated, and existing individual investors are increasingly adopting a wait-and-see attitude, leading to an abnormal short-term trading environment where only a select few altcoins experience sharp rises.

A somewhat cautious approach is also needed for future prospects. In a situation where trading volume shows a straw-like flow below 1 trillion KRW, even small selling volumes can significantly amplify volatility. Experts advise that it will take time for liquidity to recover before macroeconomic tailwinds spread to the crypto market, and conservative investments should be maintained until trading volumes on domestic exchanges like Upbit show a clear rebound.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*