In April, centralized crypto exchange trading volumes dropped, driven by factors like Binance’s fee reintroduction and market retreat.
The month of April witnessed a slump in trading volumes on centralized crypto exchanges, marking the first decrease in three months. Following a consistent growth streak in the first quarter of 2023, digital assets experienced a cool-off, leading to a drop in trading volumes. Blockchain data provider Kaiko has reported that centralized exchanges saw their lowest trading volumes of the year during this period.
In comparison to March, April’s trading volumes were almost halved, landing at around $500 billion. Despite this dip, the volumes still remain higher than the levels recorded in 2020. Kaiko highlights that the overall crypto market size is notably larger than it was before the bull run in 2020.
Factors Affecting the Centralized Exchange Volumes
Blockchain analyst Lars0x’s data shows a 43.8% decrease in legitimate centralized exchange spot volume, falling to $400.5 billion in April. The reintroduction of fees on BTC pairs by Binance, the market leader with a 71.6% dominance, is cited as the primary cause for this decline.
Data from CoinGecko indicates that Binance’s 24-hour trading volume stands at approximately $10 billion, significantly outpacing its nearest competitor, Coinbase, with a trading volume of $1.1 billion. In late April, Binance’s Bitcoin balance rose by over 50,000 BTC (roughly $1.5 billion) within a month. This increase came before the sell-off, as BTC faced strong resistance slightly above the $30,000 level.
Coinbase, a US-based crypto exchange, has seen a drop in app downloads in recent months. This decline correlates with the dwindling trading volumes in the sideways market. Apptopia, a research firm that monitors app usage metrics, provides data supporting this trend. According to Tom Grant, Apptopia’s vice president of research, the reduced app usage could signify a bearish outlook for the company.
Market Retreat from 2023 Highs
The decline in centralized exchange (CEX) volumes occurred alongside the digital asset markets’ retreat from their peak in mid-April 2023. On April 16, the total market capitalization reached an eleven-month high of $1.34 trillion. However, since then, the markets have dropped by 7.5% to $1.24 trillion.
Although crypto markets have experienced a 50% gain since the start of the year, they have remained largely range bound for the past six weeks or so. Market analysts predict that the current correction phase is likely to persist, as the first quarter of 2023 saw somewhat overheated markets.
The decline in trading volumes on centralized crypto exchanges in April reflects the digital asset markets’ pullback from their first-quarter growth. Factors such as Binance’s reintroduction of fees on BTC pairs and the overall market retreat have contributed to this downturn.