Trading volumes on centralized exchanges have dipped from their peak of $9 trillion in March.
According to the latest report by CCData, in May 2024, the cryptocurrency market witnessed a significant decrease in both spot and derivatives trading volumes.
The combined trading volume on centralized exchanges dropped by 20.1% to $5.27 trillion during the month. This decline marks the second consecutive month of reduced trading activity, influenced by the stabilized price of Bitcoin (BTC). Spot trading volumes on centralized exchanges decreased by 21.6% to $1.57 trillion. The derivatives market also saw a downturn, with volumes falling by 19.4% to $3.69 trillion. Despite this setback, the derivatives market’s dominance rose to its highest level since December 2023, as traders responded to the unexpected approval of spot Ethereum exchange-traded funds by the U.S. Securities and Exchange Commission. This resulted in a record high in open interest for Ether (ETH) derivative instruments, climbing by 50.3% to $14.0 billion.
During the month, crypto exchange Bybit achieved a new all-time high spot market share of 7.36%, despite a 12.7% drop in spot trading volume to $116 billion. Binance maintained its position as the largest spot exchange with a 34.6% market share, even as its volumes decreased by 19.8% to $545 billion.
In the derivatives market, Binance’s dominance expanded to 45.4%, trading $1.68 trillion in monthly volume, followed by OKX and Bitget with market shares of 21.3% and 14.5%, respectively.
Meanwhile, the U.S. CME exchange experienced mixed results. While overall derivatives trading volume declined by 7.42% to $115 billion, ETH futures volumes surged by 37.5% to $20.5 billion, the highest since November 2021. ETH options trading volume also reached a new all-time high, rising by 115% to $931 million, indicating increased institutional interest post-SEC approval of the spot Ethereum ETF.
Although trading activity increased due to the unexpected approval of spot Ethereum ETFs in the U.S., it appears that traders are responding to the event with a strategy of ‘buy the rumor, sell the news.’ Since ETF approvals, crypto exchanges have witnessed more than $3 billion in Ethereum position exits. Nevertheless, some analysts anticipate Ether could surpass its November 2021 all-time high of $4,870 once spot Ether ETFs commence trading, possibly this month, due to heightened demand.
Summary Review: The cryptocurrency market experienced a notable decline in trading volumes on centralized exchanges during May 2024, following a trend of reduced activity from the previous month. This dip was observed both in spot and derivatives trading, attributed partly to the stabilized price of Bitcoin and market adjustments. Despite this downturn, the derivatives market maintained its dominance, with significant increases in open interest for Ether derivative instruments. The unexpected approval of spot Ethereum exchange-traded funds by the SEC contributed to heightened interest in Ethereum futures and options trading. While some traders adopted a ‘buy the rumor, sell the news’ strategy in response to the ETF approvals, anticipation remains high for the potential impact of spot Ether ETFs on Ethereum’s price. Overall, the market continues to evolve, responding to regulatory developments and institutional interest, with Ethereum poised for potential growth in the coming months.
Disclaimer: Remember that nothing in this article and everything under the responsibility of Web30 News should be interpreted as financial advice. The information provided is for entertainment and educational purposes only. Investing in cryptocurrency involves inherent risks and potential investors should be aware that capital is at risk and returns are never guaranteed. It is imperative that you conduct thorough research and consult with a qualified financial advisor before making any investment decision.
