Declining Activity on Crypto Exchanges

Trading volumes on centralized crypto-exchanges have reached a significant low point, with May recording the lowest figures since October 2020. The Block reports that trading volumes amounted to approximately $424 billion, a stark contrast to the $1.4 trillion recorded a year ago and the $4.25 trillion observed two years ago.

This trend is attributed to multiple factors, including the departure of major market makers from the crypto market and the subsequent shift in investor preference towards decentralized exchanges (DEX). Another contributing factor is the reduction in price volatility, leading to decreased activity. LMAX analysts noted that after reaching a yearly high in March, volatility has been trending downwards, with Bitcoin’s average daily range at $818 and Ethereum’s at $57.

Notably, recent reports have highlighted staff reductions at Binance, further indicating the changing landscape of the crypto market. Analysts have also observed a significant surge in the trading volume ratio between DEX and centralized exchanges (CEX), reaching a record high of 22%. This shift has occurred alongside the rise in popularity of meme-cryptocurrencies. Furthermore, in May, the proportion of Ethereum held on centralized platforms dropped to its lowest level since July 2016, accounting for just 14.85% of the total supply.