May 2024 Sees Sharp Drop in Crypto Trading Volumes Amid Dominance Shift and ETF Approvals
Summary:
In May 2024, the cryptocurrency market saw a substantial drop in trading volumes, according to a CCData report. Spot trading volumes decreased by 21.6% to $1.57 trillion, and derivatives volume fell 19.4% to $3.69 trillion. Despite the downturn, Ethereum's derivative instruments' open interest hit a record $14.0 billion, propelled by the U.S. SEC's approval of spot Ethereum ETFs. Binance maintained its dominance in the market, and the U.S. CME exchange observed significant growth in Ethereum futures volumes. The approval of the Ethereum ETFs led to Ethereum position exits exceeding $3 billion on crypto exchanges, despite increased trading activity. However, analysts predict a surge in Ether's value once spot Ether ETFs trading starts.
The cryptocurrency market experienced a significant slump in May 2024, as per a recent CCData report, with both spot and derivatives trading volumes down. Over the month, total trades on centralized exchanges dipped 20.1%, totaling $5.27 trillion, marking the second month in a row of reduced trading activity. This decrease corresponds to the stagnation in Bitcoin (BTC) price after the network's halving in April.
Trading volumes for spot trades experienced a 21.6% reduction to $1.57 trillion on centralized exchanges. Similarly, the derivatives market saw a decrease in volumes by 19.4% to $3.69 trillion. Nevertheless, despite this downswing, the dominance of the derivatives market spiked to its highest point since December 2023. This was a reaction to the unexpected approval of spot Ethereum exchange-traded funds by the U.S. Securities and Exchange Commission. In response, Ether (ETH)'s open interest for derivative instruments shot up by 50.3%, reaching a record $14.0 billion, according to CCData's May activity report for crypto exchanges.
Although Bybit saw a 12.7% slump in spot trading volume to $116 billion, it achieved a new record in spot market share at 7.36%. Binance held steadfast as the leading spot exchange, with 34.6% of the market share, even as it saw a decrease in volumes by 19.8% to $545 billion. When it comes to the derivatives market, Binance's dominance swelled to 45.4%, trading a monthly volume of $1.68 trillion. This was followed by OKX and Bitget with 21.3% and 14.5% market shares respectively.
Performance on the U.S. CME exchange was varied. The overall derivatives trading volume shrunk by 7.42% to $115 billion, but volumes of ETH futures soared by 37.5% to reach their highest since November 2021 at $20.5 billion. The volume of ETH options trades hit a new record too, escalating by 115% to $931 million, an indication of what researchers term as "heightened institutional interest" following the SEC's approval of the spot Ethereum ETF.
Despite a surge in trading activity spurred by an unexpected spot Ethereum ETFs approval, traders seem to have adopted a 'buy the rumor, sell the news' approach. Following the ETF approvals, crypto exchanges witnessed Ethereum position exits exceeding $3 billion. However, certain analysts maintain that Ether could surpass its November 2021 record of $4,870 per unit as demands pile up once trading of spot Ether ETFs commence, which could happen this month.
Published At
6/5/2024 7:32:12 PM
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