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Crypto Market Q3 Main Highlight: Higher Market Cap But Lower Trading Volume

Compared to Q2 2021, when the crypto market experienced a 20% drop in market cap and 33% drop in trading volume due to factors like China’s crypto mining ban, Q3 saw a 31% increase in market cap but experienced a 47% drop in trading volume, CoinGecko’s Q3 2021 Cryptocurrency Report shows.

The top Asian crypto market data aggregator’s report gives a snapshot of trends and significant moves in the crypto space between July and September. It indicates that the huge discrepancy between the higher market cap and lower trading volume suggests that the market entered an accumulation stage and holders were on hand to keep it intact.

Trading volumes remained relatively stagnant likely because many market entrants were either liquidated or remain apprehensive since the May 2021 crash following China’s ban, it says.

It adds that the trading volume of most centralized exchanges (CEXs) decreased drastically in Q3 with Binance accounting for 60.13% (-$1.5 trillion) of the drop followed by Huobi at 59% (- $677 billion) while Coinbase had 30% (-$138 billion). Other CEXs had at least 26% decrease in Q3 as compared to Q2 except for FTX and which were the only two CEXs that saw growth – surged by 14% ($23.4 billion) and 316% ($105.8 billion) respectively. 

Binance’s dominance dipped from 62% in July to 54% in September amid increasing global regulatory scrutiny but it remains the top CEX. China’s continued crypto crackdown hurt Huobi’s dominance as well, scaling back from 19% in Q2 to 13% in Q3, while its Q3 trading volume decreased by nearly 60% as compared to Q2.

Bitcoin perpetual swaps trading volume across the top nine derivative exchanges saw a net decrease of approximately 25% to $1.37 trillion. Binance continues to lead while  FTX, Bitmex and OKEX continue to increase their dominance. 

While the top 10 CEXs recorded a total of $3.58 trillion spot trading volume in Q3 2021, the volume for decentralized exchanges (DEXs) were far worse dropping by 51% for the quarter. Top 10 DEXs’ spot trading volume recorded a total of $313.3 billion in Q3 2021. Meanwhile, in all, Q3 spot trading volume across the top 10 CEXs and DEXs decreased from $6.74 trillion to $3.90 trillion (-42.17%).

Nonetheless, total spot trading volume for CEXs and DEXs is still far from May’s highs despite their September volume increase by 214.96% and 171.94% respectively as compared to July. It leaves the DEX-CEX ratio decreasing from 10.44% in Q2 2021 to 8.74% in Q3 2021. 

The top 10 DEXs ranking rebalanced in August and September to show the entry of Solana-based and Avalanche-based exchanges: Raydium, Trader Joe, and Pangolin. The report states the adjustment may signal traders’ preference for DEXs with low latency and costs over those that reside on chains with higher transaction fees.

Other key highlights of the report includes that altcoins continue to have their dominance outperform Bitcoin’s which declined by about 4.5% to suggest altcoins are decoupling from Bitcoin – with the exception of Cardano and Tether. 

It points out Ethereum’s stagnating dominance (1.6%) as an indication that alternative chains are growing strong. Regarding USDT, it says more users are likely opting for other alternatives to it as Tether continues to face increased regulatory scrutiny. USDT emerged the only of the top five stablecoins not to grow by more than 20% in Q3 as it recorded its biggest decline with a 15.7% drop.

The third quarter also saw the birth of new NFT projects that drew global attention. 

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