Migrating from DEXes to CEXes: The Shift in Crypto Trading
The memecoin frenzy in the crypto market has given way to a surge in spot exchange-traded fund (ETF) trading on centralized exchanges (CEXes). Data from The Block’s Data Dashboard reveals a significant decline in monthly decentralized exchange (DEX) volumes relative to their centralized counterparts. This shift is attributed to the newfound interest in large-cap cryptocurrencies like Bitcoin and Ethereum, triggered by BlackRock’s surprise spot Bitcoin ETF filing on June 15.
Key Points:
- Between May and June, DEX volumes dropped from 22% to 16.8% relative to CEX volumes.
- As of early July, the DEX-to-CEX ratio has fallen to just under 14%.
- The surge in DEX popularity in May was driven by traders speculating on memecoins.
- Institutional investors have been lured to centralized exchanges due to the interest in Bitcoin and Ethereum.
- BlackRock’s ETF filing on June 15 sparked a wave of similar filings by other companies.
The recent increase in trading volumes is believed to be the result of institutions entering the crypto space. Devin Ryan of equity research shop JMP suggests that BlackRock’s filing and the subsequent market momentum have contributed to this uptick in volume. Several companies, including WisdomTree, Invesco, and Bitwise, have also followed suit by refiling their own applications for funds tracking the price of Bitcoin.
Hot Take:
The shift from DEXes to CEXes reflects the evolving dynamics of the crypto market. While memecoins initially drove the popularity of DEXes, the entrance of institutional investors and the rise of large-cap cryptocurrencies have redirected trading activity to centralized exchanges. This trend highlights the maturation of the crypto market and the increasing influence of traditional financial players.
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