May’s Crypto Market: Centralized Exchange Declining Volumes Hint at Bigger Changes Ahead

The trading volume across centralized cryptocurrency exchanges has notably declined, dropping to $5.27 trillion in May 2024. This decrease, roughly 20.1% from the previous month, marks a continued downtrend following the muted price activity of Bitcoin after its April Halving.

Crypto Exchange Landscape And Institutional Interest

According to CCData reports, this deceleration affects both spot and derivatives markets. Spot trading diminished by 21.6% to reach $1.57 trillion. The decline was slightly less steep at 19.4% on the derivatives front, totaling $3.69 trillion.

Despite the overall drop, derivatives trading claimed an increased market share, a shift attributed to the US Security and Exchange Commission (SEC)’s unexpected endorsement of spot Ethereum exchange-traded funds (ETFs). This endorsement sparked a 50.3% boost in Ethereum derivative instruments’ open interest to $14.0 billion.

Regarding market presence, Bybit surged to a record high in spot market share at 7.36%, even as its trading volume contracted by 12.7%. Binance, maintaining its lead, captured a 34.6% share of the spot market.

/1 Our latest Exchange Review is now live! This monthly report provides readers with insights into #crypto exchange volumes.

In May, the combined spot & derivatives trading volume on centralised exchanges fell 20.1% to $5.27tn, as $BTC & $ETH remained largely range bound.

— CCData (@CCData_io) June 5, 2024

In the derivatives sector, Binance also increased its dominance to 45.4%, with competitors OKX and Bitget holding substantial portions as well.

Meanwhile, the US CME exchange displayed mixed results; while its overall derivatives volume receded, ETH futures and options soared, achieving record highs of $20.5 billion and $931 million, respectively. This upswing suggests a growing institutional fascination, particularly following regulatory advancements.

The trading scene in May also reflected a reactive adjustment to regulatory developments, notably the SEC’s approval of spot Ethereum ETFs—a decision that momentarily increased trading activities.

Bitcoinist, citing the CryptoQuant report, has recently reported that such regulatory nods often lead to speculative trading, evident from significant outflows from major exchanges like Coinbase and Kraken.

Continuous Outflows From Exchanges Signal Bullish Sentiment

Recent reports reveal that on-chain data has detected significant Bitcoin outflows from Coinbase, suggesting possible large-scale acquisitions. According to a CryptoQuant Quicktake analysis, Coinbase has experienced substantial outflows for the seventh time this year.

The ‘exchange outflow’ metric, which measures the volume of Bitcoin withdrawn from exchange wallets, indicates investors removing their assets for long-term holding, hinting at a strong bullish sentiment.

These movements are not isolated to Coinbase; Kraken has also seen significant outflows, recording the highest movement of Bitcoin and Ethereum since 2017.

Kraken: Largest $BTC and $ETH Outflows Since 2017!

“Kraken’s #Bitcoin reserves have dropped to the same level as in 2018, now holding 122,300 BTC. For #Ethereum, this is the first time Kraken’s reserves have fallen below 1 million units, a level not seen since early 2016.” – By…

— (@cryptoquant_com) June 3, 2024

This pattern underscores a broader market behavior where large holders transition from short-term trading to permanently securing their assets. Such strategic withdrawals often signal a positive outlook for future price appreciation, reflecting investor confidence in the enduring value of cryptocurrencies.

Featured image created with DALL-E, Chart from TradingView