Decline in Trading Volume on Centralized Exchanges: Reasons and Implications
The cryptocurrency market saw a significant decline in trading activity in June, with total trading volume on centralized exchanges dropping by 21.8%. This marks the third consecutive month of declining trading activity since March, according to a report from CC Data.
The report revealed that the combined spot and derivatives trading volumes across centralized exchanges totaled $4.2 trillion in June, a sharp decrease from the peak of $9 trillion in March. The decline in trading volume was attributed to a drop in open interest on derivatives exchanges, which fell by 9.67% to $47.11 billion in June.
One of the factors contributing to the drop in open interest was the selling pressure in the market, resulting in a decrease in crypto prices. The activities of the German government, which sold approximately 50,000 BTC assets, and the proposed redistribution of over $9 billion worth of BTC assets to Mt. Gox creditors also impacted the market.
On the futures market, the Chicago Mercantile Exchange (CME) witnessed a decline in interest for futures contracts for major crypto assets like Bitcoin and Ethereum. Bitcoin futures trading volume declined by 11.5%, while Ethereum futures fell by 15.8%, leading to a total futures trading volume decrease of 11.5% to $103 billion in June.
In terms of market share among centralized exchanges, Binance saw a decrease in market share from 40.4% in July 2023 to 31.2% in June 2024, while Bybit and other fringe exchanges gained slightly. Bybit increased its market share by 2.01% to 8%, with BitGet and HTX also seeing gains.
The drop in trading activity in June can also be attributed to the high trading activity following the approval of 19B-4 forms for eight spot Ethereum ETF issuers that month. Additionally, BTC options trading volume declined by 28.2% to $1.50 billion in June, while ETH options trading volume experienced the largest decline, dropping by 58.0% to $408 million.
Overall, the cryptocurrency market experienced a decline in trading activity in June, with various factors contributing to the decrease in volume on centralized exchanges and futures markets.
