According to the report, the top eight exchanges have a combined 91.7% control over market depth. Binance leads the crypto market with a 30.7% market depth, and Kaiko noted that this increase is partly due to the exchange’s zero-fee trading promotion.
A recent report from data analytics company Kaiko has shed light on the concentration of liquidity in the cryptocurrency market. The report examines how liquidity is distributed across different exchanges, especially during times of market fluctuations and when trading volume and volatility are at multi-year lows.
Kaiko recognizes that highly concentrated crypto markets have both pros and cons. On the positive side, they offer a centralized source of liquidity, which benefits regular traders.
However, the firm argues that this concentration can also pose a significant risk to the industry, as demonstrated by the FTX collapse. It points out that many centralized exchanges lack essential protections for traders in case of failures, hacks, or market manipulation.
For its report, Kaiko collected data on the average 1% market depth and cumulative trade volume for Bitcoin (BTC) and Ethereum (ETH). The company also considered over 28 of the top cryptocurrencies by market capitalization. The findings revealed a growing concentration of liquidity over time.
Binance Emerges as Crypto Market Leader in 2023
In 2023, Binance claimed the top spot in the crypto market, with a significant 30.7% of global market depth and an even larger share of 64.3% in global trade volume, according to Kaiko.
Dominance of Top 8 Exchanges
Kaiko’s report also highlighted that the top eight exchanges together have a stronghold, controlling 91.7% of market depth and 89.5% of trading volume.
Source: Kaiko report
Binance’s Surge in Crypto Spot Volume
The report also pointed out that Binance’s share of the market in spot trading volume surged from 38.3% in 2021 to a whopping 64.3% in 2023. According to Kaiko, this increase can be partly attributed to Binance’s promotion of zero-fee trading.
Market Depth and Top Players
Although Binance’s share of market depth decreased from 42% to 30.7%, Kaiko suggested that the promotion had a more significant impact on trading volume compared to market depth. Among the other exchanges that dominate the global market depth in 2023, with over 90%, are OKX, Bitfinex, Coinbase, KuCoin, Kraken, and Bybit.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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