- With the shift of institutional interest towards digital assets, the overall crypto market experienced a strong revival in June.
- In June, the spot trading volume on CEXs increased by 16.4% to reach $575 billion, marking the first increase in three months. “Top Tier” exchange volumes grew by 12.5%, while “Lower Tier” exchanges saw a 26.4% increase compared to May.
- As of July 4th, Coinbase accounted for over 60% of BTC volume among exchanges operating in the U.S.
The consecutive spot Bitcoin ETF filings in June fueled the market revival; what role did Bitcoin play in this resurgence?
The Crypto Market Started to Revive in June
With the shift of institutional interest towards digital assets, the overall crypto market experienced a strong revival in June. The bull run started following the announcement of the spot Bitcoin Exchange-Traded Fund (ETF) filing by BlackRock, a giant in traditional finance. BTC surpassed the $31,000 mark for the first time since May 2022 and gained nearly 20% since the announcement of the spot ETF filing. Additionally, the total crypto market cap increased by 14% to $1.17 trillion.
As expected, the bull run boosted trading activity on major centralized exchanges (CEXs) and put an end to a two-month downward trend. The price movements of previous months disappointed both bull and bear forces in the market, leading to a decline in trading volumes to multi-year lows.
However, legal actions against giants like Binance and Coinbase by U.S. regulators and the pace of spot ETF filings provided much-needed volatility to the markets.
According to a report by CCData, the spot trading volume on CEXs increased by 16.4% to $575 billion in June, marking the first increase in three months. “Top Tier” exchange volumes grew by 12.5%, while “Lower Tier” exchanges saw a 26.4% increase compared to May. (CCData’s Exchange Comparison categorizes the digital asset exchange industry as “Top Tier” or “Lower Tier” based on risk levels.)
The relatively low growth rate for top-tier exchanges likely stems from legal challenges, as previously highlighted. Binance.US and Coinbase experienced a decrease in market share in June. Binance, the world’s largest exchange in terms of spot volume, became the biggest loser among CEXs, with its market share dropping by 1.4% to 41.6%.
On the other hand, Coinbase’s share decreased by only 0.08% to 5.36% in June, positioning it among the least affected. The report noted that the activities of U.S.-based institutional investors increased the volume on America’s largest crypto trading platform.
This became even more evident with the growing share of BTC volume on the platform. As of July 4th, Coinbase accounted for over 60% of BTC volume among exchanges operating in the U.S.
Additionally, data from CryptoQuant shows an increase in BTC supply on Coinbase following the price surge. Since Coinbase is predominantly used in the American market, it can be concluded that spot trading activity on the platform is driven by U.S.-based institutional investors.
Decline in the Share of Derivative Markets
The dominance of spot trading activity affected the share of derivative markets. Although the derivative volume increased by 13.6% to reach $2.13 trillion in June, its overall dominance decreased to 78.7%. This marks a notable drop from the all-time high of 80% in May.
Interestingly, this initial decline in the share of derivative markets after four months indicated an accumulation of crypto assets in spot trading.
It is worth noting that unlike futures ETFs, spot ETFs are backed by real Bitcoin, and the price of an ETF share on the exchange is expected to react similarly to the spot price of BTC.
Exchange balances, including Bitcoin, reached multi-year lows
In June, crypto volumes clearly revived; however, the supply of top-tier digital assets on CEXs continued to decline. According to Glassnode, as of July 6th, BTC supply on exchanges dropped to its lowest level in five years, accounting for only 11.6%.
Ethereum, the second-largest cryptocurrency by market capitalization, exhibited a similar behavior but with a faster decline. At the time of writing, only about 12.8% of the total circulating supply of ETH was available for trading and purchase, nearly the lowest in six years.
However, according to Binance CEO Changpeng Zhao (CZ), the situation may soon change. CZ predicted a bull run for Bitcoin over the next year and a half during a live stream, and he emphasized that crypto exchanges should be prepared for increased trading volumes.
