Trading volumes on centralized exchanges have hit a new low, reaching levels not seen in over four years. The decline is attributed to increasing regulatory pressure from United States regulators and lawmakers, as well as the stagnant price movement of crypto assets and low volatility.
According to a report from crypto analytics firm CCData, the combined spot and derivatives trading volume on centralized exchanges fell by 15.7% in May, amounting to $2.41 trillion. It marks the second consecutive monthly decline in trading volume.
Top-tier spot volumes experienced a significant drop of 24.1% to $356 billion, while lower-tier spot volumes fell by 15.0% to $138 billion.
The report also indicates that top-tier exchanges now account for 72.0% of the total spot volume, a slight decrease from the previous month.
Spot trading volume on centralized exchanges experienced a substantial decline of 21.8% to $495 billion in May, reaching the lowest monthly level since March 2019.
The decline in trading activity can be attributed to the overall weakness in the market caused by uncertain macroeconomic conditions and the lack of volatility in major cryptocurrencies.
Interestingly, the popularity of meme coins, such as PEPE and BOB, primarily traded on decentralized exchanges, has contributed to the declining trading activity on centralized exchanges.
Speculators have accumulated these tokens in anticipation of potential exchange listings, leading to increased on-chain trading activity.
Decentralized Exchanges Gain Popularity As Crypto Trading Volume Dips
Despite a 2.58% decrease in trading volume on decentralized exchanges, their market share rose to an all-time high of 12.8% for the fourth consecutive month.
Furthermore, the report highlights the decline in market share for Binance, the largest cryptocurrency exchange, for the third consecutive month.
Factors such as the suspension of zero-fee trading for USDT pairs, market weakness, and heightened regulatory scrutiny have led to a 26.0% drop in spot trading volume on Binance, reaching its lowest level since November 2020. Binance’s derivatives volume also experienced a similar trend, falling by 16.5% to $1.10 trillion, the lowest since December 2022.
In contrast, the Chicago Mercantile Exchange (CME) saw a 0.53% increase in total derivatives volume, reaching $39.1 billion. This rise is attributed to sustained institutional interest in Bitcoin, with BTC futures volume on the exchange increasing by 10.5% to $29.5 billion.
However, other products, including BTC options and ETH futures, experienced declines in volume.
Nevertheless, the decline in trading volumes on centralized exchanges can be attributed to regulatory pressure, stagnant market conditions, and the growing popularity of meme coins on decentralized exchanges.
The cryptocurrency trading landscape continues to evolve, with decentralized exchanges gaining market share and institutional interest playing a significant role in the derivatives market.
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