Binance Spot Trading Volume Plummets 70% in Q2, 2023, According to Kaiko Analysts

In a significant market development, one of the world’s largest cryptocurrency exchanges, Binance, witnessed a staggering 70% drop in its spot trading volume during the second quarter of 2023. As reported by analysts at Kaiko, this decline highlights a notable shift in trading activity on the platform. 

Binance, renowned for its robust trading ecosystem, experienced a sharp decrease in user engagement and transactional activity during this period. The findings by Kaiko analysts indicate the volatility within the cryptocurrency market.

Binance (BNB) and other Top Crypto Exchanges Suffered Decline in Spot Trading Volume

According to recent calculations by the crypto research company Kaiko in its Quarterly Market Report thesis, Binance (BNB) witnessed the highest percentage in spot trading volume amongst top exchanges.

The largest exchange globally experienced a significant blow as 70% of its total spot trading volume across various trading pairs disappeared. 

The last time this decline in spot trading volume occurred was in Q4 2020 when Bitcoin (BTC) started recovering from the bearish market conditions it endured between 2018 and 2020

Besides facing intensified regulatory scrutiny, Binance (BNB) may have contributed to its underperformance by reintroducing fees on numerous Bitcoin (BTC) trading pairs. 

Binance major market competitors, like OKX, Coinbase, and Kraken, were affected, resulting in a loss of over 50% of its spot trading volume. According to the report by Kaiko, the trading volume of euro-based pairs was also affected, dropping to two-year lows.

Simultaneously, as the excitement surrounding the possible introduction of spot Bitcoin ETFs by prominent asset management firms intensified, trading activity surged for spot Bitcoin ETF products. 

In particular, the ProShares Bitcoin Strategy (BITO) fund experienced daily trading volumes exceeding $500 million, marking the fifth occurrence of such high trading activity in its history.

Layer 2 Tokens were the worst Performers in Q2, 2023, Report Shows

The altcoin’s recent performance has sparked reactions and concerns among cryptocurrency investors and traders.

With the Securities and Exchange Commission (SEC) tightening its grip on prominent altcoins, including nearly all of the top 20 digital currencies, there was a rapid decline of 40% in Open Interest (OI) metrics within a mere five-day period in mid-June. 

The intensified regulatory actions significantly impacted the level of open positions held by market participants. According to the report, Kaiko tracks major categories of tokens – L1 altcoins, L2 altcoins, DeFi tokens, DEX tokens, BTC+ETH, and many more.

The report shows that core governance assets of L2 solutions for Ethereum (ETH) are the worst performers that closed Q2, 2023 in red. During the second quarter of 2023, L1 tokens experienced a significant decline, with their overall market capitalization decreasing by 24%. 

In contrast, Kaiko observed that the BTC+ETH portfolio was one of the few investment baskets that achieved positive growth, successfully concluding both Q1 and Q2 with favorable performance. 

While L1 tokens faced a significant loss in market value, the BTC+ETH portfolio stood out as a resilient investment option, showcasing its ability to generate growth amidst challenging market conditions.