Regulatory authorities stepped up their efforts to regulate the cryptocurrency space in the first quarter of the year, with acts that appeared to benefit decentralized cryptocurrency exchange Uniswap ($UNI) while harming centralized exchanges and service providers under increased scrutiny.
According to CCData’s Q2 2023 Outlook Report, digital assets rallied dramatically in the first quarter, with the flagship cryptocurrency Bitcoin ($BTC) increasing 72.3% to $28,477 in the first three months of the year, and presently trading above the $30,000 barrier. According to the study, monthly trade volumes for the quarter were $932 billion, a 16.8% decrease from the 2022 monthly average of $1.12 trillion, but climbing 23.2% from the previous quarter.
According to the survey, liquidity on traditional centralized exchanges like as Coinbase and Binance has declined, but UniswapV3, the largest decentralized exchange, has seen a whopping 208% increase in liquidity. Meanwhile, Coinbase and Binance have dropped by 6.35% and 13.4%, respectively, according to the business. According to CCData, the liquidity surge might be linked to market participants attempting to profit on USDC losing its peg by boosting liquidity to pools like ETH-USDC on the decentralized exchange.
Savvy traders have taken advantage of the changing financial landscape by boosting liquidity to pools such as ETH-USDC. Decentralized exchanges, such as UniswapV3, are a viable alternative to existing platforms since they provide consumers more control over their assets. According to the research, the market landscape experienced a consolidation of trading volumes in the first quarter, with the top eight exchanges now accounting for 70.5% of total volumes, up from 62.7% in January 2022.
This consolidation has benefited larger exchanges, like as Binance, which increased its market share from 33.2% in January 2022 to 50.3% in March 2023. While average yearly volumes have decreased, a comparison of Q1 2023 to Q4 2022 shows a 23.2% rise in centralized exchange monthly volumes, ranging from $7.57 billion to $9.33 billion.
Decentralized exchanges had an average monthly volume of $97.0 billion, a 27.6% increase from $76.1 billion in Q4 2022. This rise occurred during a quarter in which the financial world was dealing with the depegging of the USDC stablecoin and the failure of Silicon Valley Bank (SVB).
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