Markets
Bitcoin Halves Fallout: Crypto Trading Drops 20% in May
- Crypto trading volumes hit second monthly low after BTC halving.
- Derivatives dominated the crypto market by +70% due to speculation in ETH ETFs.
The typical financial lull associated with summer appears to be occurring in crypto markets.
In May, cryptocurrency trading activity fell 20%, marking the second month of declining trading volume on major exchanges, according to CCData. report.
Part of the report cited the “limited” market for the trend and said:
“In May, the combined spot and derivatives trading volume on centralized exchanges fell 20.1% to $5.27 billion, as prices of major digital assets continued to trend limited after the Bitcoin halving in March.”
A downward trend in cryptocurrency trading volume
Source: CCData
The report notes that in the spot market segment, trading volumes on centralized exchanges in May fell 21.6% to $1.57 trillion, less than the +$2 trillion volumes achieved in april.
Based on individual exchanges, Binance was the main competitor in spot market trading volume of $545 trillion in May. In descending order, other exchanges that followed Binance’s lead were Bybit, OKX, Coinbase, and Gate.io.
However, every exchange saw significant declines in trading volumes in May compared to April.
In terms of year-to-date performance in spot market share, Binance saw the most significant gains and increased its dominance to 34.6%.
Bybit, Bitget and XT.com also increased their market share during the same period. But Coinbase saw a slight decline while Upbit, OKX and MEXC Global saw “the largest decline in market share.”
Derivatives Market Dominance Reaches 70%
However, money in the crypto market was primarily concentrated in the derivatives market. According to the report,
“The derivatives market now represents 70.1% of the entire cryptocurrency market (compared to 69.5% in April).”
Source: CCData
Despite the rise in derivatives market dominance, overall trading volumes have been moderate, similar to the spot market. The report noted that,
“Derivatives volumes declined 19.4% in May to $3.69 trillion, recording the second consecutive decline in monthly derivatives volume.”
In contrast to TradFi’s typical sluggish financial activity over the summer, the report attributes the low volumes to historical patterns associated with low activity following Bitcoin halving events.
Amid this lull, the report noted that traders were still optimistic, based on an uptick in funding rates and rising interest rates. Ethereum [ETH] options volumes on speculation on US ETH ETFs.
“Across the four exchanges analyzed, average funding rates continued to decline, reaching 3.23%. However, the funding rate began to trend upward on May 23 as traders became bullish after the SEC’s surprise pivot on the Ethereum ETF Spot Applications.