Spot cryptocurrency trading activity on major exchanges has fallen sharply, dropping from roughly $2 trillion in October 2025 to about $1 trillion by the end of January 2026, signaling a significant slowdown as liquidity dries up and investor engagement weakens.
Bitcoin (BTC) has also seen a notable decline, trading around 37.5% below its October 2025 peak, a drop that has been accompanied by reduced market participation and a contraction in overall volume.
2.2.2026 pic.twitter.com/tGypZqIDxD
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CryptoQuant analyst, Darkfost, described the situation bluntly, saying “spot demand is drying up,” and attributing much of the pullback to the October 10 2025 liquidation event that rattled markets. Since then, spot volumes on major exchanges have roughly halved.
MILESTONE | Crypto Markets Record the Largest Single-Day Liquidation Event in History
For example, in October Binance recorded around $200 billion in Bitcoin trading volume, whereas recent figures show this has declined to around $104 billion, underscoring the broader downturn in activity.
“This contraction in volumes has brought the market back to levels among the lowest observed since 2024, suggesting a clear disengagement from investors in the crypto market and, consequently, weaker demand,” analysts commented.
Market liquidity pressures are also evident in stablecoin flows, with notable outflows from exchanges (over $4 billion) and an approximate $10 billion decline in stablecoin market capitalisation, further straining trading conditions.
Strong inflows generally indicate a willingness to gain exposure to the market, while outflows instead suggest capital preservation and a reduction in risk.
Justin d’Anethan, Head of Research at Arctic Digital, said the biggest short-term risks for Bitcoin are macro-driven, particularly uncertainty around Federal Reserve policy under Kevin Warsh, whose hawkish stance could mean slower or fewer rate cuts, a stronger dollar, and higher real yields, all of which typically weigh on risk assets like crypto.
Despite the current gloom, d’Anethan offered a contrarian view: he doesn’t believe the narrative of Bitcoin as a hedge against inflation and currency debasement is over, and noted that renewed ETF inflows, clearer pro-crypto regulation, or softer economic data prompting easier policy could ignite a meaningful rally.
“It might be a bitter medicine, but the recent move feels ultimately necessary and healthy to clear out leverage, tone down speculation, and force investors to reconsider valuations,” he said.
Alphractal Founder and CEO, Joao Wedson, added that the market hasn’t yet reached a true price bottom. For that to happen, he noted, short-term holders (STH) must be underwater, which is currently the case, but long-term holders (LTH) must also begin to carry losses, a condition not yet met.
Wedson explained that bear markets typically end only after the realised price of STH falls below that of LTH, and that a break below the key support level near $74,000 could push Bitcoin into a proper bear market.
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