Centralised exchanges around the world are witnessing an ongoing decline in crypto trading volumes in the last three months. As per information shared by data provider CCData, June saw a monthly decline of 21.8 percent in trading volumes of digital assets. Several macro-economic factors, including the recent slump in Bitcoin's price, launch of ETFs, and the selling pressure from Germany's BTC offloading, have emerged as contributors that lowered trading volumes of cryptocurrencies. Crypto trading volumes have been declining since April, according to data.
Across all centralised exchanges, the volume of crypto trading fell by a sharp 53 percent between March and June this year. In June, the trading volume was $4.2 trillion (roughly Rs. 3,51,20,631 crore) whereas back in March, the figure stood at $9 trillion (roughly Rs. 7,52,58,495 crore). “Open interest on derivatives exchanges declined by 9.67 percent to $47.11 billion (roughly Rs. 3,93,026 crore), following a series of liquidations triggered by a significant drop in cryptocurrency prices observed in June and continuing into July. In June, the total futures trading volume on CME experienced a notable decline, dropping by 11.5 percent to $103 billon (roughly Rs. 8,61,313 crore),” CCData said in its latest report.
As per CCData, Bybit, Bitget, and HTX achieved the largest rise in market share, by 2.01 percent, 1.74 percent, and 1.43 percent, respectively.
Recent Market Challenges Affecting the Crypto Market
The crypto market saw a rise in selling pressure over the past few weeks. One of the reasons for this phenomenon was because Germany reportedly offloaded BTC worth $2.3 billion in the market. In addition, defunct Japanese exchange Mt. Gox also reportedly started moving notable amounts of BTC into internal wallets which could be part of its plan to repay its users who logged financial losses when the exchange was hacked in 2014.
These two factors resulted in a lack of buying crypto assets among investors, which lowered Bitcoin's pricing multiple times, consequently reducing the values of other altcoins. Cryptocurrencies rose value in May, around the time that the US approved spot ETFs for Ether. The impact of this decision, however, cooled off 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 fallen 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, that had led to market volatility. These factors may have played a vital role in lowering crypto trading volumes on exchanges. Bitcoin is currently trading at $64,910 (roughly Rs. 54.2 lakh) and the overall market cap of the crypto sector has come to $2.37 trillion (roughly Rs. 1,98,22,732 crore), as per CoinMarketCap data.
In conversation with Gadgets360, executives from the crypto industry shared more observations that may have caused a decline in crypto trading volumes. Ritwik Dyarakoti, head of growth at Hong Kong-based Koin Network said that, “a lot of the whales have shifted to engage with crypto through ETFs for security and convenience, that has cost centralised exchanges their userbase.”
He further noted that an uncertain regulatory environment and recent lawsuits on exchanges like Binance, Coinbase and the collapse of FTX all add to the fact that investors are not using centralised exchanges heavily.
Srijan R Shetty, the co-founder of OTC crypto trading platform Fuze, highlighted that investors are starting to prefer crypto trading through other means because centralised exchanges are constantly under legal scanners in several parts of the world, causing operational roadblocks. “Sophisticated investors now prefer to trade in blocks at OTC desks with minimal price impact mirroring traditional finance markets,” Shetty said.
Another rather interesting observation shared by Shetty said meme-coin enthusiasts are also moving out of the centralised exchange ecosystems. “Speculators who are interested in meme coins are flocking to decentralised exchanges because that is where all the early price action is,” the Fuze co-founder noted.
