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Bitcoin Halving impact: 20% slump in crypto trading


The customary slowdown in finance during the summer appears to be mirrored within the realm of cryptocurrency exchanges.

Trading volumes in the crypto sphere experienced a 20% decline in May, continuing a trend of waning activity on prominent exchanges for the second consecutive month, as highlighted in a report by CCData.

This downturn is attributed to the market's stagnation, as the report elaborates.

‘The total volume of spot and derivatives trades on centralized platforms decreased by 20.1% to $5.27 trillion in May, as the valuation of key cryptocurrencies remained stagnant post the Bitcoin halving event in March.’

The decline in cryptocurrency trade volumes

A noteworthy decline in May's trading activities was observed in the spot market sector, where volumes on centralized exchanges fell by 21.6% to $1.57 trillion, a significant decrease from the $2+ trillion recorded in April.

Among these exchanges, Binance emerged as the leader in spot market trading volumes, reaching $545 trillion in May. Following Binance, in descending order, were Bybit, OKX, Coinbase, and Gate.io.

Yet, a decline in trading volumes in May compared to April was a common theme across all exchanges.

When considering the year-to-date achievements in market share within the spot market, Binance registered the most substantial growth, boosting its dominance to 34.6%.

Significant market share increases were also seen by Bybit, Bitget, and XT.com over the same timeframe. Conversely, Coinbase experienced a slight decrease, while Upbit, OKX, and MEXC Global faced the most significant drops in market share.

Growth in derivative market dominance

Meanwhile, the derivative segment of the crypto market became the focal point of investment, accounting for 70.1% of the entire market's volume (up from 69.5% in April), as per the report.

Despite this growth in market share, the overall trading volume in derivatives also saw a downturn, similar to the spot market.

‘Derivative trading volumes saw a 19.4% reduction in May, marking it the second consecutive month of decline, with volumes reaching $3.69 trillion,’ the report details.

Unlike the traditional financial sector, which usually experiences a summer slump, the report ascribes the subdued trading volumes to the typically low activity following Bitcoin halving events.

Even in this period of decreased transactions, the report highlighted a growing optimism among traders, evidenced by rising funding rates and increased trading in Ethereum (ETH) options due to speculation regarding US ETH ETFs.

‘The analysis of the four exchanges showed that the average funding rates were on a decline, hitting 3.23%. However, on May 23rd, there was a noticeable shift as traders grew optimistic after the SEC’s unexpected stance on Spot Ethereum ETF applications,’ the report stated.

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The materials found on the Cryptonica website shall not be taken as individual investment recommendations. The financial instruments or operations mentioned therein may not align with your investment profile or objectives. We assume no responsibility for any missing facts or inaccurate information in the texts. Cryptocurrencies are financial assets with high risk and volatility. Therefore, it is crucial that you conduct your own research on financial instruments and make independent decisions. Before engaging in any actions related to cryptocurrency, you shall study, understand, and comply with the laws applicable in your region and country.

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