UpdatesJun 11, 2023

Investors quit CEX exchanges! Turnover on centralized cryptocurrency platforms at the lowest level in 4 years

Centralized cryptocurrency exchanges suffer from losing customers.

Recently, trading volumes on centralized cryptocurrency platforms (CEX) have been falling. During the last few days, the American Securities and Exchange Commission has obviously contributed intensively to such a state of market conditions by attacking, among others, the Coinbase and Binance platforms. However, one cannot ignore the fact that the picture is that the landscape in the cryptocurrency sector has been deteriorating for a long time. Currently, trading volumes on centralized platforms are at the lowest level in the last 4 years.

Investors are abandoning CEX platforms

Digital currency platforms operating in the United States are currently struggling with a real problem. This is because from the current point of view, it is not entirely clear whether such exchanges will be able to continue to offer American users services such as digital currency staking and some trading pairs. All this was due to the offensive tactics of law enforcement in an extremely unfavorable form for this industry by the Securities and Exchange Commission (SEC). The American financial regulator has adopted as its strategy the classification of an increasing number of cryptocurrencies as unregistered securities.

The growing regulatory pressure has a number of very serious consequences - a huge exodus of companies from the digital currency sector outside the United States, resignation from the provision of cryptocurrency services by many brokers, but also a very dynamically falling trading volume on centralized platforms for trading digital currencies.

At this point, it is worth adding that we are not talking only about the situation from the first days of June this year, because for several months, cryptocurrency market analysts have been observing a trend illustrating falling trading volumes on centralized cryptocurrency platforms.

Moreover, on June 7, the CCData platform published the latest report, which clearly shows that the total volume of spot transactions as well as derivatives in May was reduced by as much as 15.7% compared to April. Analyzing this data, one can easily come to the conclusion that for about two months the activity of investors on cryptocurrency exchanges in the USA has been decreasing.

Binance's market dominance is shrinking

The biggest difference in turnover can be seen in the case of Binance, which is currently the largest and most popular centralized cryptocurrency exchange in the world. This is, among other things, related to a significant decrease in the company's dominant position on the digital currency market. In May this year, the share of the Changpeng Zhao-led platform in this sector fell from around 57% to only 43%. It is worth noting that this process has been going on for the third month in a row and there are no signs that could change this protracted situation.

Several different factors contribute to these situational conditions. The first of these factors is the liquidation of the trading option without transaction fees for trading pairs with the most popular stablecoin, which is USDT. However, this does not change the objective fact that in the context of Binance's problems, the behavior of the US Securities and Exchange Commission, which has been terrorizing this cryptocurrency exchange and sowing FUD against it for several months, plays an important role.

Of course, the competitors of the Binance platform have benefited from the aggressive policy of the SEC. Platforms such as BitMEX, Bullish and Bybit benefited the most from this state of affairs. Each of the mentioned platforms recorded more than 1% increase in cryptocurrency trading market share between the beginning of March and the end of May 2023.