Crypto Liquidity Becoming More Concentrated Within Top Exchanges, Says Analytics Firm Kaiko
The top crypto exchanges in the world are eating up a bigger and bigger share of the industry’s trading volume, new data suggests.
Crypto insights firm Kaiko says in a new report that the eight biggest exchanges in the world account for over 91% of market depth and 89% of all volume.
As it was several years ago, Binance still leads the pack.
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.
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.”
Kaiko says liquidity is concentrated within just a handful of exchanges, and while there are hundreds of trading platforms in existence, most only cater to a niche segment of market activity.
“While it may be optimal from a market perspective to have liquidity concentrated on just a few exchanges, the cryptocurrency industry generally holds decentralization in high regard. When it comes to centralized exchange (CEX) liquidity, there is little decentralization.”
Due to the anti-crypto regulatory agenda in the US, Kaiko says that altcoin liquidity has suffered, and has become very concentrated within three major exchanges: Coinbase, Kraken and Bitstamp.
“Kraken’s altcoin liquidity has performed particularly well, making it a strong contender with Coinbase. Since August 2022, Kraken has not seen any drop in market depth for the top 30 altcoins, whereas Coinbase has lost ~$5 million in liquidity.”
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Author: Alex Richardson
