Key Highlights:
Dominance of the Big Eight 🌐: A mere eight cryptocurrency exchanges control a staggering 90% of the global crypto trading volume, with Binance leading the pack, accounting for over 30% of the worldwide cryptocurrency market depth.
The Double-Edged Sword of Market Concentration ⚖️: While the consolidation of trading power within a few exchanges can be attributed to “natural market forces” benefiting the average trader, it also presents potential risks. The 2022 collapse of FTX and subsequent investor losses underline the vulnerabilities of such concentrated markets.
The 2023 Trading Slump 📉: Cryptocurrency trading volume witnessed a sharp decline in August 2023. The combined spot and derivative trading volumes plummeted by 11%, marking the most significant drop since October 2020.
In an era where cryptocurrency has become a ubiquitous term, a few big players stand tall among the rest. Kaiko’s recent revelations offer an eye-opening glimpse into the crypto universe.
But what’s the fuss all about? Let’s dig in.
🔔Introducing: The #Crypto Liquidity Concentration Report
— Kaiko (@KaikoData) September 8, 2023
👉 90% of liquidity is concentrated on just 8 exchanges
👉 liquidity has become more concentrated over time
👉 Binance accounts for 30% of global depth and 64% of volume
Check it out:https://t.co/kInbfgGGkW
Cryptocurrency’s Top Eight: The Figures 📈
In a staggering revelation, a mere eight exchanges claim the title for 90% of the global crypto trading volume. And if that wasn’t enough, they also hold a whopping 92% of the market depth. But who’s leading the charge?
Binance: The Unquestionable King 👑
Ever since we rang in 2023, Binance has been on a tear. Accounting for over 30% of the worldwide cryptocurrency market depth and claiming more than 64% of the trading volumes, Binance doesn’t just participate in the game – it dominates. Yet, it hasn’t all been rosy; there’s been a dip of nearly 12% in its market depth since 2021.
The Other Magnificent Seven 🌐
Following Binance, several exchanges hold significant sway. The list includes, in descending order:
- Coinbase: The U.S. giant that has made cryptocurrency a household term.
- Kraken: Offering a monster of a platform for traders.
- OKX: Asia’s pride in the crypto trading realm.
- KuCoin: Another Eastern giant making waves.
- Bybit: Known for its cutting-edge tech and user-friendly interface.
- Binance.US: Binance’s answer to the American market.
- Bitfinex: An old player that still packs a punch.
The concentration of trading volume amongst these platforms is 6% higher than in 2021, marking a clear upward trajectory.
Kaiko Speaks: An Expert Weighs In 🎙
Clara Medalie, the brain behind Kaiko’s research, offers valuable insights. In her words, the rise in trading concentration can be attributed to “natural market forces” that, interestingly, play into the average crypto trader’s hands. But, is it all good news?
The Dual Edge of Market Concentration ⚖
Highly centralized crypto markets may offer advantages, but there’s a flip side. According to Medalie, points of failure can easily emerge in such scenarios. The 2022 FTX debacle is a glaring example, where the downfall of FTX and firms like Celsius and 3AC saw investors losing billions. With concentrated markets, the problem of liquidity arises. Spread thin, this lack of liquidity can shake up volatility and ruffle the price discovery process.
The 2023 Crypto Slump: A Brief Overview 📉
In the wake of the significant dip in trading volume this year, particularly in August, many wonder about the future. Data from CCData paints a concerning picture. Both spot and derivative trading volumes plummeted by 11%, totaling at $2.09 trillion, making it the most dismal month since October 2020.
Note: Dive deeper into the world of cryptocurrencies by exploring reputable sources like Wikipedia. 📚
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Sergio Richi
Editor, Logll Tech News
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