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

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


Crypto Exchanges Concentrating Liquidity, Says Kaiko

A recent report from crypto insights firm Kaiko reveals that the world’s top crypto exchanges are dominating the industry’s trading volume. 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 maintain its position at the top. Since 2021, Binance’s market share of spot volume has increased from 38.3% to 64.3%, with a significant portion of this growth attributed to a zero-fee trading promotion.

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

The report also highlights the impact of anti-crypto regulations in the US, which has resulted in altcoin liquidity becoming concentrated within three major exchanges: Coinbase, Kraken, and Bitstamp.

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The concentration of liquidity within a few top exchanges raises concerns about the decentralization of the cryptocurrency market. While it may be beneficial for market efficiency, it goes against the principles of decentralization that the industry values. Regulatory challenges in the US further contribute to this concentration. As the industry evolves, it will be important to find a balance between liquidity concentration and decentralization to ensure a healthy and resilient crypto ecosystem.

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