August witnessed a 11.5% contraction in the combined crypto spot and derivatives trading volume to $2.09 trillion in what came as a challenging period for many. The diminishing spot trading volume and fluctuating derivatives open interest suggest that the current market, perhaps worryingly, is largely driven by speculation.
Spot market activity that fell to its lowest level since March 2019 does little to alleviate such concerns. There was a fall of 7.78% to $475 billion, also marking a second successive month of cooling. Across the same period, derivatives dropped over 12% to $1.62 trillion, its second-lowest level this year. This resulted in derivatives’ share of total market activity shrinking by a third to 77.3%. Furthermore, open derivatives contracts recorded a 19.5% slump to $17.1 billion, eliminating $4.13 billion in open interest.
Perhaps influencing these statistical declines was the fallout from the unfortunate liquidation of Sam Bankman-Fried‘s FTX exchange last year. A significant loss of investor confidence in centralized exchanges followed, consequently cratering market depth. The resulting fallout led to a reported 30% drop in the profit margin of market makers.
Notably, Binance managed to retain its leading position in both segments, despite a steadily dwindling market share. However, Binance’s spot market share shrank for the sixth consecutive month down to 38.5%, the lowest since August 2022. Its share in derivatives dipped to 53.5%.
In a slightly more positive outlook, other exchanges have seen their share rise in this tough period. Huobi’s global spot market activity share experienced a 2.26% boost, accounting for 6.09% of the total spot market volume. This shift made it the second-largest centralized spot exchange by volume. Bitget and Bybit each saw an increase in their shares of total activity to 8.66% and 12.7%, respectively.
Despite the general market contraction, an all-time high of $365 million was recorded in ether options volumes on the Chicago Mercantile Exchange, often seen as a representative for institutional activity. This space was able to witness a 4.51% rise to $41.9 billion.
Ultimately, the dynamic in the crypto market as of late seems largely cautionary. With a speculation-driven environment and uncertainty looming, it may initiative stakeholders to strategize their moves more vigilantly moving forward.
Source: Coindesk
