Crypto traders massively moved their trading operations to crypto decentralized exchanges (DEX). This is partly due to the hype around the meme coin PEPE, which has long been available only on decentralized platforms. However, regulatory uncertainty is another important factor.
DEXs share of trading volume in the spot market exceeded 20% for the first time, according to The Block. Many experts attribute this to a general decline in trading volume on centralized exchanges (CEX) and a surge of interest in meme coins, many of which are traded on decentralized exchanges only. The driving force behind this process was the PEPE token.
The peak of interest in PEPE came on May 5, when the popularity of the search query “Pepe Coin” reached 100 points around the world, according to Google Trends. The asset’s highest price was recorded on the same day, and trading volume remained at record levels for the next 24 hours.
Representatives of centralized platforms rushed to take advantage of the situation. On May 5, Binance placed PEPE, along with FLOKI, in its innovation zone and announced the start of spot trading. A number of other exchanges added trading pairs with PEPE, KuCoin, Kraken, and others.
As CEXs began trading, the hype around PEPE began to drop, as did the token’s price. Thus, the value of PEPE as of 12:00 (GMT+3), May 23, fell by 63% from the ATH set on May 5. The token’s trading volume is down more than 90% from its peak, with DEXs now accounting for about 3% of that volume. However, according to DefiLlama, DEXs share of the spot market didn’t decrease but even grew slightly, amounting to 23.5%.
Another important reason for trading activity on DEXs is the regulatory uncertainty seen in many countries. For instance, the representatives of crypto exchange Hotbit reported the suspension of trading operations from May 22 and urged users to withdraw all funds from the platform by June 21. Among the reasons to stop its activities, the exchange mentioned the constant outflow of liquidity after the events of 2022, more frequent cyberattacks, and, especially, the pressure of regulators.
Representatives of the exchange suggested that the centralized exchanges are becoming more cumbersome and do not meet the long-term trends, so the leaders of CEXs have only two options: to follow the path of decentralization or adopt the regulation. Recently, it was reported that the share of major crypto exchange Binance in the spot market fell 18% since the beginning of April 2023.
