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USD market share on centralized exchanges down 31% in one year: Kaiko

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USD market share on centralized exchanges down 31% in one year: Kaiko

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  • A report by Kaiko found that the USD market share on centralized exchanges has dropped 31% in one year.
  • Most of the trading volume on crypto exchanges are denominated by stablecoins.

Trading volumes on centralized crypto exchanges (CEX) have seen a significant surge over the past few weeks. Trade volumes of the top 18 exchanges have reached a four-month high of $51 billion, the highest level since the collapse of the Bahamas based crypto exchange FTX. 

Majority of trades on CEXs denominated by stablecoins

According to a 20 March report by digital assets market data provider Kaiko, the surging volumes on CEXs are contrasted by very limited liquidity. The market depth for BTC/USD is reportedly at a mere 2%, while BTC/USDT pairs hit 10-month lows following the collapse of Silvergate Bank.

Additionally, the report said that the depth dropped lower than it did when FTX collapsed. The shutting down of major ramps for crypto exchanges has been identified as the cause. 

The limited fiat on ramps has also led to a dramatic decrease in the U.S. dollar market share on CEXs. Fiat trade on the exchanges fell from 69% to 47%, marking a decline of 31%.

As of now, 78% of all trades on exchanges are denominated by stablecoins, leaving fiat currencies with a share of 19%. Bitcoin [BTC], Ethereum [ETH] or exchange tokens like Binance Coin [BNB] make up for the remaining trading volume. 

Kaiko is projecting an increase in the market share of stablecoins to rise further, particularly on overseas platforms like Binance. 

Among the stablecoins, Terra [USDT] is the most popular choice for traders. This is followed by Binance USD [BUSD], which accounted for 19% of the volume at press time.

The report showed,

“As for USDC and DAI, both stablecoins have very little usage on centralized exchanges and are mostly used within the DeFi ecosystem.”

On correlation between Bitcoin and Ether, Kaiko found that their price ratio had hit its highest level since July 2022.

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Saman Waris works as a News Editor at AMBCrypto. She has always been fascinated by how the tides of finance and technology shape communities across demographics. Cryptocurrencies are of particular interest to Saman, with much of her writing centered around understanding how ideas like Momentum and Greater Fool theories apply to altcoins, specifically, memecoins. A graduate in history, Saman worked the sports beat before diving into crypto. Prior to joining AMBCrypto 2 years ago, Saman was a News Editor at Sportskeeda. This was preceded by her stint as Editor-in-Chief at EssentiallySports.
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