As a seasoned crypto investor with several years of experience under my belt, I’ve seen my fair share of market volatility and trends. The recent decline in trading volume on centralized exchanges, as reported by CCData, is a trend that has piqued my interest.
As a researcher studying trading volume trends, I’ve noticed a significant decrease in trading activity during June. Specifically, there was a 21.8% reduction compared to the previous month. This follows a similar pattern we’ve seen since March, making it the third consecutive month with diminishing trading volumes on centralized exchanges.
Based on CCData’s recent report, revealed on July 17th, the aggregate trading volume for spots and derivatives on these platforms totaled $4.2 trillion. This figure is lower than the all-time high of $9 trillion reached back in March.
Open Interest and CME Declines
In simpler terms, the report brought attention to several important reasons behind the drop-off. One significant contributor was a substantial reduction in the number of active contracts in derivatives markets.
In June, the total value of derivatives contracts on exchanges decreased by 9.67% to reach $47.11 billion. This downward trend continued into July as Coinbase witnessed a substantial decrease in open interest, amounting to a 52.1% drop to $18.2 million.
During June and July, a string of liquidations occurred, causing the decrease, which analysts linked to several factors. These included the repercussions of Mt. Gox’s payouts and the German administration selling off Bitcoins.
At the Chicago Mercantile Exchange (CME), which is recognized as the global leader in institutional derivatives trading, there was a significant drop observed in the futures market.
After a robust trading month in May with a total volume of $115.3 billion, the crypto markets experienced a significant drop in trading activity during June, decreasing by approximately 11.5% to reach a volume of around $103 billion. This decrease can be attributed to reduced demand for futures contracts involving prominent cryptocurrencies such as Bitcoin and Ethereum. The trading volume for Bitcoin futures contracts specifically fell by nearly 11.5%, whereas the decline in Ethereum futures was more pronounced at approximately 15.8%.
Bybit Gains as Binance Declines
In May, the green light for Ethereum ETFs on the stock markets ignited intense trading, but this heightened activity subsided in June. Over a six-month period, Bybit, an exchange based in Dubai, experienced a significant growth of 2.01%, expanding its market share to 8%. Likewise, BitGet and HTX, exchanges located in Singapore, registered gains of 1.74% and 1.43% respectively.
In contrast, Binance experienced a decrease in market share from 40.4% in July 2023 to 31.2% in June 2024, representing a decline of approximately 9.2%. At the same time, the average funding rates on the four examined exchanges exhibited some improvement, recovering from the unfavorable rates recorded during the preceding month.
The volume of options trades for Bitcoin decreased by 28.2%, amounting to $1.5 billion. For Ethereum, this figure saw the most significant decrease, dropping by 58.0% to reach a total of $408 million.
I analyzed the recent decline in Ethereum’s price, which can be primarily linked back to heightened activity in options trading. This surge in options trading was fueled by the Securities and Exchange Commission (SEC) approving spot Ethereum Exchange-Traded Funds (ETFs) in May. The anticipated launch of eight such ETFs on July 23 further amplified these trading activities, contributing to the observed price decline.
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2024-07-20 10:23