CryptocurrencyExchanges

CryptoCompare: large cryptocurrency exchanges push small markets out of the market

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CryptoCompare found that top-level exchanges are crowding out small sites from the market, while the overall security of the cryptocurrency market still leaves much to be desired.

According to a new CryptoCompare report , small sites like Coinhub and Bitexbook are being squeezed out of the market by large cryptocurrency exchanges like Binance and Coinbase. Top-level exchanges, which have the lowest risk level for traders in terms of safety, insurance and market quality, have increased their market share over the past nine months. CryptoCompare Research Manager Constantine Tsavliris said:

“The widening gap in trading volume between higher-level exchanges and lower-level exchanges may be a sign of a more mature market. This also reflects the fact that a large number of exchanges have moved into the category of top-level sites, thanks to new market participants and improved quality of work. ”

CryptoCompare awarded the highest AA rating to only two exchanges: Gemini and Coinbase. At the next level of rating A are Binance, Kraken and Bitfinex. In the last quarter of 2019, top-level exchanges – the first 68 platforms from 165 platforms in the CryptoCompare study or any exchanges with a rating of B or higher – accounted for 32% of global cryptocurrency trading volumes. However, in the second quarter of 2020, this figure was already 40%.

One of the leading positions was taken by the Binance exchange, which contributed to the implementation of transactions worth $ 41.8 billion in June. Lower-level exchanges, which CryptoCompare considers more risky for traders, are gradually being squeezed out of the market. In the last quarter of 2019, they had a 68% market share. Since then, this figure has been declining, and this has become especially noticeable in the last month. In June, the main exchanges accounted for 46% of the global crypto assets trading volume, and the lower level exchanges accounted for 54%.

CryptoCompare also stated that the overall security of the cryptocurrency market is low. Analysts found that only 15% of exchanges claim to hold 95% of user funds in cold wallets. However, only 5% of exchanges offer crypto assets insurance. CryptoCompare said that 38% of exchanges “interact with high-risk objects,” for example, darknet market traders or gambling providers, citing CipherTrace data. 

On such exchanges, transactions with these participants account for more than a quarter of all transactions. CipherTrace also found that 44% of exchanges do not meet KYC requirements. The lowest level of security, according to researchers, is inherent to sites from Russia, and the safest exchanges are located in Japan. According to Glassnode, on July 8, the outflow from cryptocurrency exchanges rose to 20,660 BTC. In addition, in June, traffic on cryptocurrency exchanges decreased by 14%.

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