Increasing Concentration of Crypto Liquidity in Major Exchanges, Reveals Kaiko Analytics Firm

Increasing Concentration of Crypto Liquidity in Major Exchanges, Reveals Kaiko Analytics Firm

Cryptocurrency Exchanges Concentrating Liquidity, Says Kaiko

A recent report from cryptocurrency insights firm Kaiko outlines that the world’s top cryptocurrency exchanges are dominating the industry’s volume of trading. According to the data, the eight largest exchanges account for over 91% of market depth and 89% of overall volume.

Binance, the leading exchange, continues  to sustain its position at the top. Since 2021, Binance’s market share of spot volume has increased from 38.3% to 64.3%, with a whole lot of portion of this growth attributed to a zero-fee trading promotion.

Kaiko emphasizes that liquidity is heavily concentrated within a small number of exchanges. Although while there are hundreds of platforms of trading available, most only serve niche market segments. This concentration goes against the decentralized ethos of the digital currency industry.

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The report likewise outlines the impact of anti- cryptocurrency regulations in the United States, which has resulted in altcoin liquidity becoming concentrated within 3 major exchanges: Coinbase, Kraken, and Bitstamp.

Hot Take

The concentration of liquidity within a few top exchanges raises concerns about the decentralization of the digital currency market. Although while it could be beneficial for market efficiency, it goes against the principles of decentralization that the industry values. Regulatory challenges in the United States further contribute to this concentration. As the industry evolves, it will be critical to find a balance between liquidity concentration and decentralization to secure a healthy and resilient cryptocurrency ecosystem.

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Daisy Hodley emerges as a luminary blending the roles of crypto analyst, devoted researcher, and editorial virtuoso into a harmonious symphony. In the realm of digital currencies, Daisy’s insights resonate with an exquisite resonance across a diverse spectrum of minds. Her adeptness in decoding intricate threads of crypto complexities seamlessly intertwines with her editorial finesse, translating intricacy into a captivating melody of understanding.

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