Crypto Liquidity Becomes More Concentrated In Exchanges

It has been just revealed that the crypto liquidity seems to become more concentrated in crypto exchanges. Check out the latest details about the matter below.

According to a recent report by crypto insights firm Kaiko, the largest cryptocurrency exchanges in the world are capturing an increasingly larger portion of the industry’s trading volume.

The report reveals that the top eight exchanges currently hold over 91% of market depth and 89% of total volume. It’s worth noting that Binance remains the top-performing exchange, just as it was several years ago.

Says Kaiko,

“Liquidity is concentrated and has become more concentrated over time. In 2023, the top exchange, Binance, has accounted for 30.7% of global market depth and 64.3% global trade volume. The top 8 largest platforms account for a whopping 91.7% of depth and 89.5% of volume.”

The notes continued and revealed the following:

“Since 2021, Binance’s market share of spot volume has increased from 38.3% to 64.3%. It should be noted that a big part of this increase was linked to Binance’s zero-fee trading promotion.”

As per Kaiko’s analysis, the cryptocurrency market’s liquidity is focused on a limited number of exchanges. Although there are several trading platforms, most of them are tailored to serve a specific market segment.

This scenario may benefit the market; however, it contradicts the industry’s emphasis on decentralization. Regrettably, centralized exchange (CEX) liquidity is not adequately decentralized.

In the United States, the anti-crypto regulatory agenda has adversely affected altcoin liquidity, which is now highly concentrated in only three major exchanges: Coinbase, Kraken, and Bitstamp.

Kraken’s altcoin liquidity has performed exceptionally well and is a robust competitor to Coinbase.

Since August 2022, Kraken has not experienced a drop in market depth for the top 30 altcoins, while Coinbase has encountered a liquidity loss of roughly $5 million.

Stay tuned for more news from the crypto space and make sure to check out the markets as well.