2019 Q2 Cryptocurrency Exchange Industry Research Report
The cryptocurrency market continued to show signs of strength in the second quarter of 2019, with trading volume climbing 165% from the first quarter. The trading volume of the overall market (all 182 centralized and 17 decentralized exchanges included) reached USD 4.0801 trillion in the April-June period, posting 165% growth from the first quarter. Specifically, the trading volume of centralized exchanges totaled USD 4.0745 trillion, up 198% from the first quarter while the trading volume of decentralized exchanges grew by 509% from the first quarter to USD 5.6 billion in the second quarter.
- The cryptocurrency market continued to show signs of strength in the second quarter of 2019, with trading volume climbing 165% from the first quarter. The trading volume of the overall market (all 182 centralized and 17 decentralized exchanges included) reached USD 4.0801 trillion in the April-June period, posting 165% growth from the first quarter. Specifically, the trading volume of centralized exchanges totalled USD 4.0745 trillion, up 198% from the first quarter while the trading volume of decentralized exchanges grew by 509% from the first quarter to USD 5.6 billion in the second quarter.
- Centralized exchanges accounted for more than 99% of the total market share of Q2 2019 whereas decentralized exchanges still holds a meager market share due to poor performance, currency, trading depth and other constraints. Nonetheless, cryptocurrency exchanges using centralized structures are more vulnerable to hacks. Centralized exchanges such as Crytopia, Coincheck and Mt Cox have lost millions of dollars from hacks while operating on a centralized platform. With decentralized exchanges, users’ funds are not withheld, and trading occurs directly between users’ and their wallets. Since decentralized exchanges typically do not require KYC and can easily circumvent regulations, it is likely that DEXs will gain popularity among investors in the future. These are some of the reasons why exchanges such as Binance are moving towards decentralization.
- Without a doubt, the impact of exchanges is evident with the top 40 exchanges accounting for more than 90% of the total market trading volume.
- TokenInsight has found that the trends of centralized exchanges and their trading volumes were highly consistent in the second quarter, even with OKEx being the least relevant in terms of correlation from other exchanges at 0.93. Although the price-volume match is reasonable, it also shows that asset classes currently offered by top exchanges do not differ much with each other.
- A growing number of exchanges introduced derivatives trading in the first half of 2019. In addition to cryptocurrency exchanges, the Commodity Futures Trading Commission (CFTC) approved LedgerX's introduction of physically-settled Bitcoin futures contracts in late June, ending CME’s monopoly over cash-settled Bitcoin futures contracts. The average daily trading volume of CME Bitcoin futures contracts reached USD 270 million in the second quarter, with turnover up 36% in May from April. Moreover, the average daily turnover of CME Bitcoin futures contracts exceeded USD 515 million in June. Derivatives trading is still only the tip of the iceberg in the world of crypto digital assets as the average daily turnover of centralized exchanges held the largest market share in the second quarter, totaling USD 38.6 billion.
- KuCoin was the fastest growing exchange in terms of trading volume in the second quarter, recording a whopping 441% growth from the first quarter. KuCoin was followed by Coinbase Pro, up 331%, BitFlyer, up 284% and OKEx, up 197%.
- The correlation coefficient between the overall market trading volume and the BTC price trend reached 0.71. A constant rise in the BTC price boosted investors’ confidence and promoted trading activity in the entire second quarter. The latest fluctuations in the trading volume at the end of June was most likely caused by Facebook's announcement of Libra tokens and its own exchange platform.
- With regards to fiat currencies, except the Korean Won falling 23.5% against trading volumes, the U.S. Dollar, Yen, Euro, and the Brazilian Real all remained on an upward trend in the second quarter. The Yen showed the strongest gains against trading volumes, up 3.9 times from the first quarter.
- TokenInsight’s data shows that the average daily trading volumes of each UV contribution in TokenInsight’s rated top 10 exchanges reached USD 891 in the second quarter from USD 200 in the first quarter, an increase of 346%. Likewise, the average daily trading volumes of each UV contribution in TokenInsight’s top 20 exchanges amounted to USD 5,891 in the second quarter. The growth in the average daily trading volume of the leading exchanges was fueled by a warmer market and anticipated growth in trading via cell phones. At the same time, some exchanges experienced more severe wash trading in trade volumes in the second quarter, triggering some false booms. A specific study on wash trade volumes of each exchange is currently underway and will be one of the topics to be researched by TokenInsight in the future.
- Platform tokens continued to perform well in the secondary market during the second quarter of this year. MX tokens of MXC, the black horse exchange, saw a growth of 1688%, followed by BNB, up 100%. MXC and BIKI exchanges particularly received significant attention within the crypto industry in the second quarter for their all-round attempts to innovate their products and build a platform with multi-dimensional competitive advantages. However, it still remains to be seen if small exchanges can make a major breakthrough in the cryptocurrency market. New exchanges and their push for growth and product innovation is a good sign for the industry. With increased competition, top exchanges must keep up with the times in order to sustain a leading market position.
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