Crypto News- The top 8 crypto exchanges: In a recent analysis, the prominent data analytics company, Kaiko, scrutinized the concentration of liquidity within the cryptocurrency market. The report delved into the intricate details of liquidity distribution across various exchanges, all while navigating the challenges of market fluctuations and multi-year lows in trading volume and volatility.
Kaiko openly acknowledged that highly concentrated crypto markets offer both advantages and disadvantages. On the positive side, they serve as a centralized reservoir of liquidity, benefiting the average trader.
The top 8 crypto exchanges collectively control 91.7% of market depth
Nevertheless, the firm asserted that this concentration can also present a significant risk to the industry, citing the example of the FTX collapse. Kaiko argued that many centralized exchanges lack essential safeguards for traders in the face of potential failures, hacks, or market manipulation.
For this report, Kaiko claimed to have compiled data on the average 1% market depth and cumulative trade volume for Bitcoin (BTC) and Ethereum (ETH). Additionally, the company considered over the top 28 cryptocurrencies based on market capitalization. The findings revealed an intensification of liquidity concentration over time.
Kaiko’s analysis pointed to Binance emerging as the dominant player in 2023, commanding a staggering 30.7% of the global market depth. Furthermore, the report highlighted that Binance accounted for an impressive 64.3% of the global trade volume. Simultaneously, it emphasized that the top eight exchanges collectively controlled a commanding 91.7% of market depth and 89.5% of trading volume.
Moreover, the report underscored a remarkable surge in Binance’s market share in spot volume, a meteoric rise from 38.3% in 2021 to a commanding 64.3% in 2023. Kaiko, in its analysis, attributed this substantial increase, in part, to Binance’s strategic implementation of a zero-fee trading promotion.
Although the concentration of market depth specifically for Binance saw a decline, dropping from 42% to 30.7%, Kaiko posited that the promotional campaign exerted a more profound influence on trading volume as opposed to market depth. This highlights the effectiveness of such marketing strategies in attracting a significant influx of traders. Furthermore, it’s essential to recognize that Binance is not the sole contender in this highly concentrated arena.
The report emphasized that there are other key players in the cryptocurrency exchange landscape that collectively control over 90% of the global market depth in 2023. These notable exchanges include OKX, Bitfinex, Coinbase, KuCoin, Kraken, and Bybit, each contributing to the overall dominance of these select few exchanges in the cryptocurrency market. This concentration of influence raises pertinent questions about the resilience and stability of the crypto ecosystem, given the potential vulnerabilities associated with a limited number of dominant players.
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