Woofun AI reports that a structural realignment of capital flows is evident as spot exchange-traded funds (ETFs) divert investment demand away from centralized exchanges (CEXs), according to data from The Block.

Trading activity rebounded sharply to $37 billion last week, yet this figure remains substantially lower than the $105 billion peak recorded in mid-October following the onset of a market-wide selloff. This disparity highlights that while short-term liquidity can spike rapidly, it has not yet recovered to the levels seen during the previous volatility cycle.

Monthly aggregates further illustrate this deceleration, with August generating $490 billion in volume compared to July's $670 billion.

Notably, altcoin demand continues to flow primarily through CEXs, indicating that decentralized venues have not fully supplanted traditional exchanges for smaller tokens despite the broader shift toward regulated products.

Per Woofun AI, institutional players are increasingly favoring regulated instruments, which thins order books and reduces trading fee income for exchanges.

However, the higher volatility and retail appeal of altcoins sustain CEX activity, preserving a critical revenue stream even as mainstream capital migrates off-exchange.

This transition underscores a market where ETF adoption reshapes demand patterns, capturing a growing share of mainstream investment. Centralized exchanges retain their dominance in altcoin trading, but the long-term trajectory points toward a bifurcated ecosystem driven by regulatory preference.