Surprising Drop: Centralized Exchange Crypto Volumes Plummet by 60% in Q4!

• The spot trading volume of cryptocurrencies on centralized exchanges has significantly declined in the second quarter of 2023, reaching its lowest level since 2020.
• Binance, the largest cryptocurrency exchange, suffered the most significant loss in trading volume, attributed to its decision to end zero-commission policy for Bitcoin pairs and its legal battle with US regulators.
• Despite the decrease in spot trading volume, the overall cryptocurrency market, including Bitcoin, has performed positively, with Bitcoin reaching a value of $31,020 and options trading volume reaching its highest level in three months.

Spot Trading Volume of Cryptocurrencies on Centralized Exchanges Hits a New Low

The second quarter of 2023 has witnessed a significant decline in the spot trading volume of cryptocurrencies on centralized exchanges, reaching its lowest level since 2020. According to a report by Kaiko, a leading on-chain analytics platform, the average spot trading volume of cryptocurrencies on centralized exchanges has dropped from $4.7 trillion to $1.8 trillion, marking a decrease of over 60%. This decline in trading volume highlights the current market conditions and the changing dynamics of the cryptocurrency industry.

Binance Faces Major Setback

Among the cryptocurrency exchanges, Binance has experienced the most significant loss in trading volume. The exchange has lost approximately 70% of its trading volume, making it the hardest hit. Binance’s decline in trading volume can be attributed to its decision to end the zero-commission policy for Bitcoin pairs and its ongoing legal battle with US regulators. These factors have contributed to a loss of market share for Binance, with its share dropping from 64% to 53%. Additionally, Binance’s US subsidiary, Binance.US, has also witnessed a decline in its market share, holding less than 1% of the total market share at the end of the quarter.

Other major cryptocurrency exchanges, including Coinbase, OKX, Kraken, and Huobi, have also experienced a significant decline in spot trading volume, with losses exceeding 50%. These developments indicate a shift in the trading patterns and preferences of cryptocurrency traders.

Contrasting Performance of Cryptocurrency Prices

Despite the decline in spot trading volume, the overall cryptocurrency market has shown positive performance. Bitcoin, the leading cryptocurrency, has witnessed a price increase from $28,500 to $31,020 in the past 90 days, representing a gain of nearly 9%. This upward trend has been accompanied by overall green movements in altcoins, with several altcoins experiencing significant rallies during this period.

Furthermore, the options trading volume for Bitcoin reached its highest level in three months, surpassing $20 billion in quarterly volume. The majority of options trading volume was driven by bullish sentiment, with call options accounting for 65% of the total volume.

In addition to market dynamics, the recent application process for a spot Bitcoin ETF with BlackRock, the world’s largest asset management company, has positively influenced the trading volume of Bitcoin ETFs. Notably, the ProShares Bitcoin Strategy ETF (BITO) has achieved daily trading volumes exceeding $500 million for the fourth time since its launch in June.

These developments indicate that while the spot trading volume of cryptocurrencies on centralized exchanges has declined, the overall cryptocurrency market remains resilient and continues to attract investors and traders.