Regulatory authorities stepped up their efforts to regulate the cryptocurrency space in the first quarter.
According to CCData’s Q2 2023 Outlook Report, digital assets rallied considerably in the first quarter, with the leading cryptocurrency Bitcoin ($BTC) increasing 72.3% to $28,477 in the first three months of the year and now trading above the $30,000 mark.
The report adds that the average monthly trading volume for the quarter was $932 billion, representing a 16.8% decrease from the monthly average of $1.12 trillion in 2022, despite a 23.2% increase compared to the previous year’s fourth quarter.
According to the report, the liquidity of traditional centralized exchanges such as Coinbase and Binance has decreased, while the liquidity of the largest decentralized exchange, UniswapV3, has increased by a staggering 208%.
According to the firm, Coinbase and Binance have experienced respective declines of 6.35 and 13.4 percent. According to CCData, the liquidity increase could be attributed to market participants seeking to profit from USDC losing its index by adding liquidity to pools such as ETH-USDC on the decentralized exchange.
By adding liquidity to pools such as ETH-USDC, shrewd traders have been able to take advantage of the altering financial landscape. Decentralized exchanges like UniswapV3 provide users with greater control over their assets, making them a viable alternative to conventional platforms.
The market landscape experienced a consolidation of trading volumes during the first quarter, with the top eight exchanges accounting for 70.5% of total volumes, up from 62.5% in January 2022.
This consolidation has been advantageous for larger exchanges, such as Binance, whose market share increased significantly from 33.2% in January 2022 to 50.0% in March 2023.
The average monthly volume of decentralized exchanges has increased by 27.6% from Q4 2022, when it was $76.1 billion, to $97.0 billion. During this quarter, the financial world grappled with the decoupling of the USDC stablecoin and the failure of Silicon Valley Bank (SVB).
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