According to the latest report by CCData, May 2024 saw a significant decline in both spot and derivatives trading volumes in the cryptocurrency market. The combined trading volume on centralized exchanges fell by 20.1% to $5.27 trillion during the month. This decline marks the second consecutive month of reduced trading activity, driven by the range-bound price of Bitcoin (BTC) following the network’s April halving.
Decline in Spot and Derivatives Trading Volumes
Spot trading volumes on centralized exchanges dropped 21.6% to $1.57 trillion. Similarly, the derivatives market experienced a decline, with volumes decreasing by 19.4% to $3.69 trillion. Despite this downturn, the derivatives market’s dominance increased to the highest level since December 2023, as traders responded to the United States Securities and Exchange Commission’s (SEC) unexpected approval of spot Ether (ETH) exchange-traded funds (ETFs). This led to a record high in open interest for Ether derivative instruments, which rose by 50.3% to $14.0 billion.
| Market Segment | Volume in May 2024 | % Change |
|---|---|---|
| Total Trading Volume | $5.27 trillion | -20.1% |
| Spot Trading Volume | $1.57 trillion | -21.6% |
| Derivatives Trading Volume | $3.69 trillion | -19.4% |
Performance of Major Exchanges
During the month, crypto exchange Bybit achieved a new all-time high spot market share of 7.36%, despite a 12.7% drop in spot trading volume to $116 billion. Binance maintained its position as the largest spot exchange with a 34.6% market share, even as its volumes fell by 19.8% to $545 billion.
In the derivatives market, Binance’s dominance grew to 45.4%, trading $1.68 trillion in monthly volume, followed by OKX and Bitget with market shares of 21.3% and 14.5%, respectively.
| Exchange | Spot Market Share | Spot Trading Volume | Derivatives Market Share | Derivatives Trading Volume |
|---|---|---|---|---|
| Binance | 34.6% | $545 billion | 45.4% | $1.68 trillion |
| Bybit | 7.36% | $116 billion | – | – |
| OKX | – | – | 21.3% | – |
| Bitget | – | – | 14.5% | – |
Mixed Performance of CME Exchange
The U.S. CME exchange saw a mixed performance in May. While overall derivatives trading volume fell by 7.42% to $115 billion, ETH futures volumes surged by 37.5% to $20.5 billion, the highest since November 2021. ETH options trading volume also hit a new all-time high, increasing by 115% to $931 million, reflecting heightened institutional interest post-SEC approval of the spot Ether ETF.
Although trading activity increased due to the surprise approval of spot Ether ETFs in the U.S., traders appear to be reacting to the event with a “buy the rumor, sell the news” strategy. Since the ETF approvals, crypto exchanges have seen more than $3 billion in Ether position exits. However, some analysts believe Ether could break its November 2021 all-time high of $4,870 once spot Ether ETFs start trading, possibly this month, due to increased demand pressure.
| Instrument | Volume in May 2024 | % Change |
|---|---|---|
| ETH Futures Volume | $20.5 billion | +37.5% |
| ETH Options Volume | $931 million | +115% |
Despite the current downturn, some market analysts are optimistic about the future of Ether. The approval of spot Ether ETFs is expected to drive demand and potentially push ETH prices higher. This optimism is fueled by the anticipation of increased institutional interest and investment in Ether.
Experts suggest that the current market conditions, characterized by reduced trading volumes and heightened regulatory clarity, may set the stage for a more stable and mature market environment. As the cryptocurrency market continues to evolve, the role of regulatory approvals and institutional participation will likely become more prominent.
The cryptocurrency market experienced a notable decline in trading volumes in May 2024, with both spot and derivatives markets affected. However, the approval of spot Ether ETFs by the SEC has introduced new dynamics, leading to increased open interest and trading volumes in Ether derivatives. As the market adjusts to these changes, the future remains uncertain but potentially promising for cryptocurrencies like Ether. The ongoing developments highlight the importance of regulatory clarity and institutional interest in shaping the future of the crypto market.
Featured image credit: Ratchapon Supprasert via Vecteezy