Why Crypto Trading Volumes Are Dropping on Centralized Exchanges
Centralized exchanges across the world have been witnessing a sustained decline in crypto trading volumes over the past three months. According to information shared by data provider CCData, June saw a 21.8 percent monthly decline in digital asset trading volumes. Several macroeconomic factors including the recent drop in Bitcoin price, the launch of ETFs, and the selling pressure from the German BTC offloading have emerged as contributing factors that have lowered cryptocurrency trading volumes. Crypto trading volumes have been declining since April, according to data.
Across all centralized exchanges, crypto trading volume fell by a sharp 53 percent between March and June this year. In June, the trading volume stood at $4.2 trillion (approximately Rs. 3,51,20,631 crore), while the figure stood at $9 trillion (approximately Rs. 7,52,58,495 crore) in March. “Open interest on derivatives exchanges declined by 9.67 percent to $47.11 billion (approximately Rs. 3,93,026 crore), following a series of liquidations triggered by a significant drop in cryptocurrency prices that was observed in June and continued into July. In June, the total futures trading volume on CME saw a notable decline, falling by 11.5 percent to $103 billion (approximately Rs. 8,61,313 crore),” CCData said in her latest report.
According to CCData, Bybit, Bitget and HTX achieved the largest increase in market share, with 2.01 percent, 1.74 percent and 1.43 percent respectively.
Recent Market Challenges Impacting the Crypto Market
The crypto market has seen an increase in selling pressure in recent weeks. One of the reasons for this phenomenon was that Germany Reportedly BTC worth $2.3 billion has been floated on the market. In addition, the defunct Japanese exchange Mt. Gox has also Reportedly began moving significant amounts of BTC to internal wallets, which could be part of a plan to repay users who suffered financial losses when the exchange was hacked in 2014.
These two factors resulted in a lack of crypto asset purchases among investors, which drove down the price of Bitcoin several times, which in turn drove down the value of other altcoins. Cryptocurrencies surged in value in May, around the time the US approved spot ETFs for Ether. However, the impact of this decision cooled down in June. Around the second week of June, BTC was trading at $68,049 (roughly Rs. 56.8 lakh) on foreign exchanges. By June 28, the price of BTC had dropped to $61,637 (roughly Rs. 51.4 lakh).
At the time, the televised debate of US presidential candidates had skipped the mention of crypto in their speeches, leading to market volatility. These factors may have played a crucial role in lowering crypto trading volumes on exchanges. Bitcoin is currently trading at $64,910 (approximately Rs. 54.2 lakh) and the total market capitalization of the crypto sector has reached $2.37 trillion (approximately Rs. 1,98,22,732 crore), according to CoinMarketCap facts.
Speaking to Gadgets360, crypto industry executives shared more observations that may have led to a drop in crypto trading volumes. Ritwik Dyarakoti, head of growth at Koin Network in Hong Kong, said that “many whales have moved to crypto via ETFs for security and convenience, which has cost centralized exchanges their user base.”
He further noted that regulatory uncertainty, recent lawsuits against exchanges like Binance and Coinbase, and the collapse of FTX all contribute to investors not heavily utilizing centralized exchanges.
Srijan R Shetty, co-founder of OTC crypto trading platform Fuze, stressed that investors are starting to prefer crypto trading through other means as centralized exchanges are constantly under legal scanners in different parts of the world, creating operational hurdles. “Sophisticated investors are now preferring to trade in blocks on OTC desks with minimal price impact that mirror traditional financial markets,” Shetty said.
Another interesting observation Shetty shared was that meme coin enthusiasts are also moving out of centralized exchange ecosystems. “Speculators interested in meme coins are flocking to decentralized exchanges because that’s where all the early price action is,” the Fuze co-founder noted.
