Bitcoin’s Summer Slump: Why August Was a Nightmare for Crypto Exchanges

Bitcoin’s Summer Slump: Why August Was a Nightmare for Crypto Exchanges

August
turned out to be not only an unfavorable month for the prices of major
cryptocurrencies but also for the performance of the largest exchanges.
According to data collected by Finance Magnates Intelligence, the top
ten platforms in terms of spot volumes recorded their worst month in nearly
three years. Total volumes fell to $359.59 billion, losing 13% monthly and a
staggering 50% year-over-year (YoY).

Sharp Decline in Spot
Volumes Among Major Cryptocurrency Exchanges

The total
monthly trading volume of the top ten cryptocurrency exchanges, measured by
monthly turnover, fell to just under $360 billion. This represents a 13%
decline compared to the $413 billion reported in July 2023 and a 50% drop
compared to last year’s period ($715 billion in August 2022).

Notably, this
was the lowest result for leading exchanges like Binance, Upbit, Hobi, and
Coinbase since October 2020, nearly three years ago. For context, these
exchanges reached a record volume of $3.7 trillion in May 2021. The August 2023
figure is thus more than ten times worse.

From a
market share perspective, Binance continues to dominate, holding 53% of the
total volumes reported by the top ten cryptocurrency exchanges in August. Upbit
and Huobi were nearly tied for second place, each with a 9% market share. The
next positions were held by Coinbase and OKX, each with a 7% market share.
Despite regulatory issues in various parts of the world, these exchanges lag
far behind Binance.

Huobi Sees Significant
Gains While Upbit Faces Steep Losses

Analyzing
the performance of various cryptocurrency exchanges, Huobi stands out as the
only one reporting a significant month-over-month increase in spot trading
volumes. The value rose by 48% compared to July 2023, reaching $31.36 billion.
On the other end of the spectrum, Upbit saw its volumes shrink by 48%
month-over-month (MoM), dropping from $60.91 billion reported in July to $31.8
billion in August.

The
fluctuations in trading volumes for individual exchanges have been summarized
in a chart, with detailed information provided below:

  • Huobi:
    Monthly volumes increased by 48%, yearly by 36% to $31.36 billion
  • Bitfinex:
    Monthly volumes increased by 4%, yearly decreased by 70% to $3.07 billion
  • ByBit:
    Monthly volumes increased by 3%, yearly by 160% to $23.25 billion
  • Binance:
    Monthly volumes decreased by 8%, yearly by 57% to $192.12 billion
  • Coinbase:
    Monthly volumes decreased by 9%, yearly by 55% to $29.59 billion
  • Bitstamp:
    Monthly volumes decreased by 11%, yearly also by 11% to $3.92 billion
  • Kraken:
    Monthly volumes decreased by 16%, yearly also by 16% to $13.76 billion
  • OKX:
    Monthly volumes decreased by 16%, yearly by 56% to $23.63 billion
  • KuCoin:
    Monthly volumes decreased by 41%, yearly by 65% to $10.09 billion
  • Upbit:
    Monthly volumes decreased by 48%, yearly by 53% to $31.8 billion

What Caused the Decline in
Cryptocurrency Market Volumes?

Several
factors could be responsible for such drastic declines in spot trading volumes
in the crypto market and testing lows from October 2020. One of them is
undoubtedly the poor performance of Bitcoin and key altcoins in August. BTC
lost over 11%, falling for the second consecutive month and losing the most on
a monthly basis since November 2022. Ethereum (ETH) also declined in a similar
range, reaching the highest monthly decline rate in nine months.

Additionally,
summer months are generally not the most active for cryptocurrencies and
traditional markets. A July report from Robinhood, for example, showed a
decrease of 38% in total trading volumes in the digital asset market.

Falling
volumes also signal that investors’ risk appetite is much lower than just a few
months ago. Data from analytics firm Glassnode show that in 2023, investor
activity in spot and derivative markets fell to the lowest levels in two years.

The
industry is certainly not helped by regulatory uncertainty. Lawsuits from the US
SEC against Coinbase and Binance, increasing problems for the latter in finding
a place in Europe, and tightening cryptocurrency regulations have reduced
interest in the sector. This applies to both retail and institutional
customers.

Although
the June wave of applications to create Bitcoin ETFs momentarily raised
investors’ hopes for a market revival, optimism quickly faded. Significantly,
since the SEC once again delayed its decision on approving such regulated
instruments.

Worse
still, September may not bring a reversal of these negative trends. In
Bitcoin’s history so far, September has been one of its worst months, in which
BTC lost an average of 1.8%. Increases usually appear in October and November,
and we can only witness a rebound in spot volumes in that period.

This article was written by Damian Chmiel at www.financemagnates.com.

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