• 23 July, 2024
Crypto Exchanges News

Know The Reason For the Drop-In Decentralized Exchanges Trading Volume

Decentralized Exchanges (DEXs) attracted investors with their superior security and decentralization, especially after the FTX meltdown in 2022

Decentralized Exchanges (DEXs) are quite a popular choice among investors, with no single point of control or with third parties. This gives a sense of security and stability to investors as the fallout of FTX last year created much havoc in the world of digital assets.

The following are the best Decentralized Exchanges (DEXs) in 2023

Uniswap-           DEX provides the highest number of trading pairs

Curve-Finance-  Best exchange for swapping and trading stablecoins

Pancake Swap-  Binance Smart Chain’s (BSC) best DEX

As per Coinmarketcap, Uniswap(V3), is the top player in the Decentralized Exchanges (DEXs) holding 0.0016% of the total market share of the market.

Although the Decentralized Exchange market is a crucial player in the cryptocurrency market, still the trading volume has declined since November 2022, which later picked up in January 2023. One of the reasons for the drop is the hawkish Federal Reserve stance. 

In 2022, the Federal Reserve increases the rate hike, which directly impacted DEX’s volumes. As the cost of borrowing increased due to the aggressive rate hikes, investors took a safe flight toward bonds and stocks.

How does the volume drop affect exchanges?

A drop in trading volumes directly impacts the revenue for the Decentralized Exchanges. Further, the lower volumes imply lesser liquidity in the market, which might be a reason for concern for investors.

What’s next for DEXs

Federal Reserve kept a less hawkish tone in the last two meetings which led to gains in the overall crypto market. The global financial market is still not out of the woods as the high inflation and recession fear persists. Any aggressive hint from the policymakers could further dampen the sentiment around DEXs

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