Grayscale’s recent victory over the SEC has been hailed as a significant setback for the financial regulator’s efforts to rein in the cryptocurrency industry. However, while this win may have dealt a blow to the SEC, it did not lead to a notable increase in crypto asset accumulation in the spot market. In fact, according to CCData’s latest report, the decline in trading volume continued in August, despite minor fluctuations. This raises questions about the overall health and future prospects of the crypto market.
The combined trading volume for spot and derivatives on centralized exchanges experienced an 11.5% decline in August, reaching a total of $2.09 trillion. This represents the lowest monthly trading volume for the year, and the second-lowest since October 2020. The drop in trading activity can be attributed to price fluctuations, which triggered a significant long liquidation event, similar to what was witnessed during the FTX collapse.
Spot Trading Volume Declines for the Second Consecutive Month
Spot trading volume on centralized exchanges has declined for the second month in a row, dropping by 7.78% to $475 billion. This marks the lowest monthly spot trading volume seen since March 2019. Additionally, daily trading volumes on centralized exchanges hit a low of $5.90 billion on August 26th, their lowest level since February 7th, 2019. The persistent low trading volumes on centralized exchanges since April of this year are reminiscent of the sluggish trading activity observed during the bear market of 2019.
Binance, the largest spot trading platform in the crypto market, continues to hold its dominant position. However, its market share has been on a decline for the past six months. In August, Binance’s market share fell to 38.5%, its lowest since August 2022. Meanwhile, Huobi, despite facing insolvency rumors, experienced a remarkable increase of 46.5% in trading volumes, reaching $28.9 billion. This growth represents the second consecutive monthly increase for Huobi, and its market share has climbed to 6.09%, making it the second-largest exchange after Binance.
Decline in Derivatives Trading Volume
Aside from the decline in spot volumes, derivative trading volumes also witnessed a significant decrease of 12.5% in August, totaling $1.62 trillion. This represents the lowest monthly volume for derivatives since December 2022, and the second-lowest level since 2021. The decline in derivatives is partly responsible for the decrease in the overall crypto market share, with derivatives now constituting 77.3% of the market, down from 78.2% in July. This decline is driven by market volatility, which resulted in a significant decline in open interest last month.
Binance maintains its position as the largest derivatives exchange by monthly volume, despite experiencing an 18.1% decrease in August compared to July. Binance’s total trading volume for August was $865 billion. OKX takes the second spot with a trading volume of $315 billion, followed by Bybit with $205 billion. These exchanges continue to dominate the derivatives market, although the overall volume is on a downward trend.
The decline in trading volume and market share for both spot and derivatives trading raises concerns about the overall health and future prospects of the crypto market. The prolonged bearish sentiment, coupled with regulatory scrutiny, has created a challenging environment for market participants. Market participants will need to navigate these challenges and find new avenues for growth and stability in order for the crypto market to regain its momentum.