The Majority of Cryptocurrency Trading Handled by Eight Exchanges: Kaiko Analysis
The majority of digital asset trading around the world is handled by just eight cryptocurrency exchanges, according to an analysis by Kaiko.
The study revealed that just eight cryptocurrency exchanges handle 90% of the global cryptocurrency trading volume and hold up to 92% of the market depth.
Since the beginning of 2023, Binance has captured more than 30% of the depth of the worldwide cryptocurrency market. It is also responsible for more than 64% of cryptocurrency trading volumes globally.
The exchange led by Changpeng Zhao has maintained its position as the most important player in the digital assets sector. However, according to the report, market depth has decreased by approximately 12% since 2021.
Other exchanges with the lion’s share of the cryptocurrency market include Coinbase, Kraken, OKX, KuCoin, Bybit, Binance.US, and Bitfinex, in that order.
The latest trading volume concentration figures are roughly 6% higher than in 2021, when the eight largest exchanges were responsible for just over 84% of global cryptocurrency trading volumes.
According to Kaiko’s Research Director, Clara Medali, the increasing concentration of liquidity in a few exchanges is the result of “natural market forces” that, in her opinion, have favored the average cryptocurrency trader.
In a note accompanying the report, Medali warned that highly concentrated cryptocurrency markets could more easily create points of failure, as evidenced by the collapse of FTX in 2022. This event caused thousands of cryptocurrency investors to leave the market after losing billions from the fall of FTX and other companies. Other encoders such as Celsius and 3AC.
Highly concentrated cryptocurrency markets are both a good and a bad thing. There is no doubt that there is a lack of liquidity, which, when spread across many exchanges and trading pairs, can exacerbate volatility and disrupt the price discovery process.
Clara Medali, Research Director, Caico
Caico’s report comes on the heels of the year’s biggest drop in cryptocurrency trading volume numbers in August. According to information from CCData, combined spot and derivative trading volume in August fell by more than 11% to $2.09 trillion. This was the second worst monthly total since October 2020.
