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Crypto Market Near-Term Upside Is Likely Capped: Bank of America
The bank expects digital asset trading volumes to remain subdued, with retail investors remaining on the sidelines.
Updated May 23, 2023, 8:51 a.m. Published May 23, 2023, 8:51 a.m.
There is limited upside for cryptocurrency markets in the near-term, Bank of America (BAC) said in a research report Friday.
“Low conviction, limited catalysts and outperformance year-to-date leave the digital asset sector stuck in a trading range with a challenging macro backdrop likely capping digital asset upside,” analysts Alkesh Shah and Andrew Moss wrote.
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The bank says conversations with clients suggest that hedge funds are returning to token trading, “with momentum strategies likely benefitting to some extent from heightened volatility due to declining trading volumes.”
Momentum investing is when investors buy assets that are rising and sell them when they appear to have peaked, using volatility to identify buying opportunities in short-term uptrends and then selling when momentum appears to be waning.
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Bank of America says it expects cryptocurrency trading volumes to remain subdued, with retail investors remaining on the sidelines.
Traditional finance (TradFi) companies and tech firms continue to build blockchain applications focused on tokenizing demand deposits, repo settlements and bond issuance, the report added.
Read more: Tokenization of Real-World Assets a Key Driver of Digital Asset Adoption: Bank of America
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Exchange Review - March 2025
CoinDesk Data's monthly Exchange Review captures the key developments within the cryptocurrency exchange market. The report includes analyses that relate to exchange volumes, crypto derivatives trading, market segmentation by fees, fiat trading, and more.
What to know:
Trading activity softened in March as market uncertainty grew amid escalating tariff tensions between the U.S. and global trading partners. Centralized exchanges recorded their lowest combined trading volume since October, declining 6.24% to $6.79tn. This marked the third consecutive monthly decline across both market segments, with spot trading volume falling 14.1% to $1.98tn and derivatives trading slipping 2.56% to $4.81tn.
- Trading Volumes Decline for Third Consecutive Month: Combined spot and derivatives trading volume on centralized exchanges fell by 6.24% to $6.79tn in March 2025, reaching the lowest level since October. Both spot and derivatives markets recorded their third consecutive monthly decline, falling 14.1% and 2.56% to $1.98tn and $4.81tn respectively.
- Institutional Crypto Trading Volume on CME Falls 23.5%: In March, total derivatives trading volume on the CME exchange fell by 23.5% to $175bn, the lowest monthly volume since October 2024. CME's market share among derivatives exchanges dropped from 4.63% to 3.64%, suggesting declining institutional interest amid current macroeconomic conditions.
- Bybit Spot Market Share Slides in March: Spot trading volume on Bybit fell by 52.1% to $81.1bn in March, coinciding with decreased trading activity following the hack of the exchange's cold wallets in February. Bybit's spot market share dropped from 7.35% to 4.10%, its lowest since July 2023.
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What to know:
- Ethena's USDe becomes fifth stablecoin to surpass $10 billion market cap in just 609 days, while Tether's dominance continues to slip.
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