Eight Cryptocurrency Exchanges Control 90% of the Crypto Market Liquidity

Report on Crypto Liquidity

At a time when CFTC is strapping its boots for a wagging war against DeFi, a recent report has revealed that the majority of the crypto liquidity is locked in centralized crypto exchanges. The analysts from Bankless Times seem to believe that 91.7% of the total crypto market liquidity is distributed among 8 top exchange platforms for 2023.

The report has named these exchanges to be Binance, OKX, Coinbase, Kraken, KuCoin, ByBit, Binance.US, and Bitfinex. This report was published on 15th September this year. These numbers are also reciprocated by Kaiko who evaluated the same statistics.

However, Kaiko has also identified that two of the top exchanges in the sector accounts for 58.5% of total crypto market liquidity. Meanwhile, the report also reveals that only one centralized exchange platform accounts for 64% of the total trading volume.

With the increasing pressure from regulators, cryptocurrency markets have become more regulated and centralized since 2021. The exchange with the biggest market portion accounted for only 38% of the total crypto trading volume and during that time 64% trading volume was distributed between 4 different exchanges.

The increasing intervention and objection of regulators towards cryptocurrency sector has resulted in rise of more centralization and regulatory complaint firms. During the last 2 years, decentralization has not been able to keep up with the rising tide of centralized trading platforms.

Analyst Alice Leetham retained that concentration of liquidity in the crypto markets harbors advantages and disadvantages. She opines that there are some clear upside to the event.

However, she also raised concerns about the risks that its poses to the wider crypto community. She suggested that the sectors should look for solutions that allow it to retain all the advantages while offsetting any associated risks.

Banker Times have also retained that since some exchanges got a head started in comparison to others; therefore, they were able to enjoy greater dominance in terms of liquidity and market share.

At the same time, these exchanges have managed to list some of the most profitable trading pairs and build goodwill with their consumers over the years.  

Analysts Claim that Liquidity is Both Good and Bad for Crypto Enterprises

 The analysts at Bankless Times have retained that CEX that have considerable liquidity can manage to invite more liquidity to their platforms. At the same time, the analysts reveal that customers prefer the trading forums that have more liquidity and a high trading volume as the ideal services provider.

At the same time, the report has maintained that greater liquidity can also be a threat to investors as it concentrates a higher dependency on specified exchanges.

In this manner, the crypto sector may have to deal with a single point of failure that can damage the stability of the entire space.

Role of Bitstamp in XRP Growth

On the other hand, XRP token is getting a boost from Bitstamp exchange. The exchange trading platform has nominated various cryptocurrencies for incremented staking rewards. To the delight of XRP community, XRP token is among these staking tokens. The 6 cryptocurrencies for which Bitstamp has raised its APY to 6% are ETH, USDT, LTC, BCH and XRP.

However, Bitstamp has informed its investors that the staking increment is to last for only 30 days. The trading platform relisted the token following the ruling from the courts that XRP was not an unregistered security.