Markets
Bitcoin Halves Impact: Cryptocurrency Trading Drops 20% in May
- Cryptocurrency trading volumes hit second monthly low post-BTC halving.
- Derivatives dominated the cryptocurrency market with +70% due to speculation on the ETH ETF.
The typical financial lull associated with summer appears to be underway in the cryptocurrency markets.
In May, cryptocurrency trading activity fell 20%, marking the second month of declines in trading volume at major exchanges, according to a CCData relationship.
Part of the report cited the “rangebound” market for the trend and read:
“In May, the combined volume of spot and derivatives trades on centralized exchanges fell 20.1% to $5.27 trillion, as prices of major digital assets continued to swing in ranges after the Bitcoin halving in March.”
A downward trend in cryptocurrency trading volume
Source: CCData
The report notes that in the spot market segment, May trading volumes on centralized exchanges fell 21.6% to $1.57 trillion, lower than the +$2 trillion volumes achieved in April.
Based on individual exchanges, Binance was the top contender by spot market trading volume, at $545 trillion in May. In descending order, other exchanges that followed Binance’s lead were Bybit, OKX, Coinbase, and Gate.io.
However, each exchange saw notable declines in trading volumes in May compared to April.
Regarding year-to-date performance on spot market share, Binance recorded the most significant gains and increased its dominance to 34.6%.
Bybit, Bitget, and XT.com also saw increases in market share over the same period. But Coinbase saw a modest decline while Upbit, OKX and MEXC Global saw “the largest decline in market share.”
Derivatives market dominance rose to 70%
However, the money in the cryptocurrency market was mainly concentrated in the derivatives market. According to the report,
“The derivatives market now represents 70.1% of the entire cryptocurrency market (up from 69.5% in April).”
Source: CCData
Despite the surge in dominance in the derivatives market, overall trading volumes were as low as those in the spot market. The report noted that,
‘Derivatives volumes fell 19.4% in May to $3.69 trillion, marking the second consecutive decline in monthly derivatives volume.’
Unlike TradFi’s typical sluggish financial activity over the summer, the report attributed the low volumes to historical patterns associated with low activity following Bitcoin halving events.
Amid the calm, the report noted that traders were still bullish, based on a hike in borrowing rates and a surge in Ethereum [ETH] options volumes on US ETH ETF speculation.
Across the four exchanges analyzed, average funding rates continued to decline, reaching 3.23%. However, the funding rate began to rise on May 23 as traders turned bullish following the SEC’s surprise reversal on Ethereum Spot ETF filings.’