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Are traders moving to CEX? Data suggests

In this post:

  • Trading spot volume of CEX and DEX often vary
  • CEX has future projects
  • DEX lower fees, fair price, and the free market are the keys

You can trade in the crypto market in two ways: through CEX or DEX. Their volume varies from time to time. Over the last half-decade, the DEX has emerged to compete with the CEX in every aspect of trading. DEX’s total volume surpassed the CEX between April 2021 to 2022 when the on-chain transaction on DEX became 224 billion dollars compared to CEX’s 175 billion.

The volume of these Exchanges depends on the overall market of the crypto. Because when Bitcoin was in peak in 2018, the transaction of CEX was more compared to DEX. However, in 2021, when the overall market was in suitable mode, both exchanges got tremendous volume. Nevertheless, the recent black market saw a decline in the volume of both CEX and DEX.

Before further going into data and statistical analysis, you need to know some basics of CEX and DEX. Because there is a debate among the traders about the potential benefits of the two, some think that the future belongs to Decentralized exchanges because of their benefits. In contrast, others believe that centralized exchanges may gain momentum because of their future projects.

What are CEX and DEX?

The CEX means the centralized exchange network in which the information moves internally through an efficient network, and all the data is protected through an organized and centralized system. Everything a trader does is monitored, managed, and owned by a single authority.

If you are about to trade on a centralized exchange, you must place your complete confidence in the exchange. These centralized exchanges include Binance, CEX.io, Kraken, Coinbase Exchange, and OKEx.

On the other hand, the decentralized exchange works on the free market principle. There is no intermediary between the traders. Everyone has asses to buy or sell a particular coin on these exchanges. They are very easy to use because you only need a public address to access decentralized exchanges. All the secret information regarding the wallet remains with the users.

Which is leading the show?

As mentioned above, the volume of these exchanges varies from time to time and depends on the market’s sentiments and conditions. In 2018, CEX had more volume than DEX, but within five years, the volume of decentralized exchanges increased enormously. And between April 2021 to April 2022, it has a trading volume of 244 billion dollars.

It peaked in June 2021, when 80 percent of the on-chain transaction volume was of the decentralized exchanges. This was because the centralized owns the wallet, and there is the danger of losing all the money if something happened to the exchange.

However, things have changed; now, 18% of trading spot volume accounts for decentralized exchanges, which might increase. It is not relatively early to say when the decentralized spot trading volume will flip over the centralized one because the CEX is now focusing on new projects that might attract more and more traders, thus increasing the volume more and more.

On the other hand, the lower transaction fees, the fairer pricing, and the free market of the decentralized exchanges may counter the volume of centralized exchanges.

Final thoughts

Both centralized and decentralized exchanges are the natural face of the crypto market. Every trader must take one of these two as their trading platform. Before trading on any of these two, you should know the fundamentals of both decentralized and centralized exchanges. Over the years, they both flipped each other based on volume. However, you should be more concerned about the pros and cons of these exchanges when deciding to trade rather than volume.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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