The cryptocurrency market has entered a period of intense scrutiny and volatility. After a bullish run in early 2021, signs of a deepening bear market have emerged as major exchanges report sharp declines in revenue and user traffic. With regulatory pressure mounting globally—especially in China—centralized platforms like Binance and Huobi have seen profits and trading volumes nosedive. Yet, amid this downturn, decentralized exchanges (DEXs) are defying the trend, reporting explosive growth. So, is the crypto market truly in a full bear phase? Let’s explore the data, trends, and shifting dynamics reshaping the industry.
Sharp Decline in Centralized Exchange Revenues
Recent data reveals a dramatic contraction in the performance of leading centralized cryptocurrency exchanges. According to London-based research firm CryptoCompare, global spot trading volume dropped 42.7% in June, falling to $2.7 trillion. Derivatives trading volume also declined by 40.7%, settling at $3.2 trillion. On average, the top 15 crypto exchanges experienced a staggering 51.6% drop in trading volume month-over-month.
Binance, one of the world’s largest exchanges, saw its second-quarter profits fall by 33.47% compared to Q1. Based on its quarterly BNB burn announcement—where 1,296,728 BNB tokens worth $394 million were destroyed—analysts estimate Binance’s Q2 net profit at $1.968 billion. This marks a significant slowdown from its Q1 profit of $2.914 billion.
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Similarly, Huobi Global reported a more severe decline. Its June HT token burn—totaling 3.797 million HT tokens valued at $48.6 million—suggests monthly revenue of approximately $243 million. Compared to May’s revenue of around $682 million (RMB 4.44 billion), this represents a 64.6% drop in just one month.
Despite repeated attempts to obtain official commentary, both Binance and Huobi declined to provide further insights into their financial performance or operational strategies during this downturn.
The Rise of Decentralized Exchanges (DEXs)
While centralized exchanges struggle, decentralized exchanges are thriving. According to Messari’s DeFi report, DEX trading volume surged to $405 billion in Q2 2021, an 83% increase from the previous quarter. This growth highlights a fundamental shift in user behavior—traders are increasingly migrating to non-custodial platforms that offer greater privacy, censorship resistance, and control over assets.
Experts like Liu Changyong, Director of the Blockchain Research Center at Chongqing Technology and Business University, argue that DEXs pose an existential threat to centralized platforms—especially during bear markets. “DEXs operate with minimal overhead and are inherently harder to regulate,” Liu explains. “As governments tighten oversight, users may prefer decentralized alternatives that don’t require KYC or expose them to sudden shutdowns.”
This trend suggests that while overall market activity may be declining, capital and engagement are not disappearing—they’re simply shifting platforms.
Regulatory Crackdown Triggers Traffic Collapse
A major catalyst behind the decline in exchange activity has been the global regulatory crackdown—particularly in China. On May 21, 2021, the Financial Stability and Development Committee of China’s State Council explicitly called for action against Bitcoin mining and trading activities. This was followed by bans on crypto mining in regions like Inner Mongolia, Qinghai, Xinjiang, Sichuan, and Anhui.
Additionally, the People’s Bank of China (PBOC) issued warnings prohibiting financial institutions from providing services related to virtual currency transactions. Marketing, commercial promotion, and even paid traffic referrals for crypto platforms were deemed illegal.
These measures led to the shutdown of prominent crypto media outlets like Bi Shijie (CoinWorld), and social media accounts of key influencers were suspended on Weibo and other platforms.
The impact on web traffic was immediate and severe.
Data from SimilarWeb shows that from April to May 2021, traffic to major crypto exchange websites peaked—only to collapse after May 21.
- Binance: Web visits dropped from 250 million in May to 150 million in June—a 40% decline.
- Coinbase: Visits fell from 125 million to 71 million—a 44% drop.
- Huobi: Experienced a 48.11% decrease in global traffic.
- OKX: Saw visits plunge by 56.65%, from roughly 13.1 million to 5.71 million.
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Regional data further illustrates the impact:
- Huobi’s top traffic source remained China (37.64%), but visits from the country dropped by over 51%.
- OKX saw Chinese user traffic fall by 60.19%, while Turkey and Iran also registered steep declines.
- Even in international markets like Russia, the UK, and Brazil, Binance reported traffic drops ranging from 21% to 57%.
These figures underscore how policy changes in one major market can ripple across global exchange ecosystems.
Why This Bear Market Feels Different
This downturn isn’t just about price corrections—it reflects structural shifts in the crypto landscape:
- Regulatory maturity: Governments are no longer ignoring crypto; they’re actively shaping its future.
- User migration: Traders are moving from centralized custodianship to self-sovereign wallets and DEXs.
- Reduced speculation: With stricter access controls and banking restrictions, speculative retail trading has cooled.
As Liu Changyong notes, “Bear markets test resilience. Exchanges that rely solely on high-volume speculation will suffer. Those investing in security, compliance, and decentralized infrastructure may survive—and even emerge stronger.”
Frequently Asked Questions (FAQ)
Q: Are all crypto exchanges losing money?
A: While most centralized exchanges report declining revenues due to lower trading volumes and regulatory pressure, decentralized exchanges (DEXs) have seen significant growth in volume and user activity.
Q: Why did Binance and Huobi profits drop so sharply?
A: The decline is attributed to reduced trading activity following China’s crypto crackdown, global market corrections in Bitcoin and altcoins, and decreased speculative trading.
Q: What caused the sudden drop in website traffic for crypto exchanges?
A: The May 2021 announcement by China’s Financial Stability Committee triggered a wave of regulatory actions, including bans on mining and trading promotions, leading to widespread user deplatforming and traffic loss.
Q: Are DEXs immune to regulation?
A: While DEXs are harder to regulate due to their decentralized nature, they are not entirely immune. Some jurisdictions are exploring ways to restrict access or impose liability on developers and liquidity providers.
Q: Will this bear market last through 2025?
A: Market cycles vary, but historical trends suggest bull runs follow bear markets. Innovation during downturns—especially in DeFi and Layer 2 solutions—often sets the stage for future growth.
Q: Can centralized exchanges survive long-term competition from DEXs?
A: Yes—but only if they adapt by enhancing security, reducing fees, improving transparency, and integrating decentralized features like wallet interoperability and staking.
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Conclusion
The crypto market is undoubtedly in a bear phase—with falling prices, shrinking revenues, and declining traffic on major centralized platforms. However, this period also signals maturation. Regulatory clarity is emerging, speculative excess is being filtered out, and innovation is shifting toward decentralized infrastructure.
While Binance and Huobi grapple with profit declines, DEXs are proving resilient—and even growing. The future of crypto may not lie in centralized gatekeepers but in open, permissionless financial systems that operate beyond borders.
For traders and investors, this means adapting: embracing self-custody, understanding DeFi protocols, and staying informed amid evolving regulations. The bear market isn’t the end—it’s a transformation.
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