With Bitcoin Crashing, What Is Happening to Trading on Exchanges?

With Bitcoin Crashing, What Is Happening to Trading on Exchanges?

Key facts:
  • Centralized exchanges have been particularly affected in this fall.
  • Binance slightly increased its market dominance.

The first quarter of this year 2022 has not only been characterized by the negative performance of most of the cryptocurrencies in the market, including bitcoin (BTC). There has also been a very sharp decline in trading volumes on industry exchanges.

The most affected volumes were those of spot cryptocurrency trading, the so-called spot trading. Those volumes fell by up to 40% during the first quarter of this year, compared to the last quarter of 2021. This is reflected in data from the most recent CoinGecko report for the first quarter of 2022.

The aforementioned percentage corresponds to the data of the top 10 centralized exchanges in the ecosystem . Binance, OKX, Coinbase, FTX or Kraken, for example. The drop is slightly reduced to 37% if decentralized exchanges are included, although the percentage is still very striking in the global landscape.

The derivatives markets were not spared from this large decline in trading volumes either, although the drop was much smaller than in the spot markets: between 7% and 12% decrease in capital flow compared to the last quarter of last year.

In the midst of this scenario that could look very negative for the market, Binance came out the winner. Despite the decline in volumes, the exchange headed by Changpeng Zhao (CZ) saw its global volume dominance grow slightly in these three months.

Meanwhile, Huobi trading volume on Huobi fell 40% from last quarter . After being one of the main exchanges in operation, in this period it had only 4.3% of the global volume, thus confirming its fall after the ban on cryptocurrency operations in China, its country of origin.

Less exchange activity, greater shelter from volatility

The data on the fall in volume on exchanges corresponds to a trend that has been observed in recent times. The amount of coins deposited on exchanges has been declining .

We have seen this situation not only in the case of bitcoin , but also with examples such as the departure of more than 300,000 ethers (ETH) from this type of platform in just one week, as we reported in GLM in mid-March.

Additionally, another segment of the CoinGecko report, previously cited in this medium, reflects the growth of capital invested in stablecoins during these months. A situation that contrasts with the rest of the market, which has tended to fall so far this year , with few relevant exceptions.

In short, the data for this quarter seem to indicate that investors are opting for the receipt. On the one hand, fleeing from the volatility of the market; on the other, leaving aside the speculative markets.

Samuel Edwards
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