Falling volumes on centralized exchanges suggest big changes are ahead

Trading volume on centralized cryptocurrency exchanges has significantly declined, falling to $5.27 trillion in May 2024. This decrease, approximately 20.1% from the previous month, marks a continued downward trend following modest activity of Bitcoin prices after his Halving in April.

Crypto exchange landscape and institutional interest

According to CCData relationships, this deceleration affects both the spot and derivatives markets. Spot trade fell 21.6% to reach $1.57 trillion. The decline was slightly less marked, standing at 19.4% on the derivatives front, for a total of $3.69 trillion.

Centralized crypto exchange metrics. | Source: CCData

Despite the overall decline, derivatives trading has captured a larger market share, a shift attributed to the US Security and Exchange Commission’s (SEC) unexpected approval of Ethereum spot exchange-traded funds (ETFs). This approval triggered a 50.3% increase in Ethereum derivatives open interest to $14.0 billion.

Regarding market presence, Bybit reached a record level of spot market share of 7.36%, even as its trading volume contracted by 12.7%. Binance, maintaining its leadership, gained a 34.6% share of the spot market.

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In the derivatives sector too, Binance has increased its dominant position to 45.4%, while competitors OKX and Bitget also hold substantial shares.

Meanwhile, the US ECM stock exchange showed mixed results; While overall derivatives volume declined, ETH futures and options soared, reaching record highs of $20.5 billion and $931 million, respectively. This recovery suggests growing institutional appeal, particularly following regulatory advances.

The May trading landscape also reflected a responsive adjustment to regulatory developments, particularly SEC approval Spot ETF on Ethereum-a decision that temporarily increased commercial activities.

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

Continued outflows from trades signal bullish sentiment

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

The “exchange outflow” metric, which measures the volume of Bitcoin withdrawn from exchange wallets, indicates that investors are removing their assets to hold them for the long term, suggesting strong bullish sentiment.

These movements aren’t just about Coinbase; Kraken also saw significant outflowsrecording the highest Bitcoin and Ethereum movement since 2017.

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This pattern highlights broader market behavior in which large holders move from short-term trading to permanently protecting their assets. Such strategic pullbacks often signal positive prospects for future price appreciation, reflecting investor confidence in the enduring value of cryptocurrencies.

The market capitalization value of the global digital currency on the daily chart. Source: Crypto TOTAL Market Cap on TradingView.com

Featured image created with DALL-E, chart from TradingView

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