Recently, traders have recently moved away from decentralized exchanges in favor of their centralized counterparts. This migration came against the backdrop of a bullish Bitcoin rally that sparked renewed interest in major cryptocurrencies.
The rise and fall of decentralized exchanges
Last May, decentralized exchanges, or DEXs, experienced an unprecedented boom. Traders have rushed to these platforms, attracted by speculation on “memecoins”, these cryptocurrencies whose value is often more linked to their popularity on social networks than to their real usefulness. For exemple, memecoin trading volume Pepe on Ethereum-based DEXs topped $600 million on May 5.
However, this trend began to reverse between May and June. Monthly volumes on DEXs compared to their centralized counterparts have seen a significant drop, from 22% to 16.8%. In July, this proportion fell further, falling to just under 14%.
The role of the Bitcoin rally and exchange-traded funds (ETFs)
June 15, BlackRock, the world’s largest asset manager, has submitted an application for a spot Bitcoin exchange-traded fund (ETF). This announcement sparked renewed interest in big cryptocurrencies like Bitcoin and Ethereum. Since BlackRock’s filing, Bitcoin has risen over 20%.
This increase in trading volumes would a priori be due to the participation of institutional investors. Indeed, following the Blackrock filing, we have seen the arrival of Fidelity, Ecovest, WisdomTree, Bitwise… the financial mass of the asset management giants having applied for an ETF amounts to 27 trillion dollars (27 trillion).
The landscape of cryptocurrency exchanges has seen significant changes in recent months. The initial rise of DEXs was followed by a resurgence of centralized exchanges, boosted by the Bitcoin rally and the growing interest of institutions in this market. While the future remains uncertain, one thing is clear: Cryptocurrency market dynamics will continue to evolve based on macroeconomic trends and institutional investor interest.
Source: Data