2020 Q2 Cryptocurrency Spot Exchange Industry Report
Jul 30.2020TokenInsight Research
CEXQuarterly ReportMarket Analysis


Overall, the cryptocurrency trading market performed worse than the Q1, mainly because the market fluctuated very little throughout June and remained flat for a long time. The market sentiment was exhausted brought about by the halving of BTC, and when the profit-making effect was low, the trading activities remained quiet.

According to our research, the overall competitive landscape of spot market will not change much in the next period of time. The core reason is that, whether it is spot or derivatives, the current pattern dependents more on a large number of retail investors.

Retail investors are less sensitive to transaction fees, and even the need for security and transparency is not as great as expected. Convenience, speed and profitability are the key factors affecting retail investors' choices. One of the most important points is the fast deposit channel. In the current spot market competition pattern, fiat currency deposits are different for different types of fiat currencies. For some fiat currencies with great demand, the deposit channel is relatively simple, and there is no fierce competition in the trading link. And users brought by the deposit channel will stay on the exchange that provides the channel. Therefore, we can see that even if some exchanges reduce the spot transaction fee to a very low level, or even free of charge, the number of users it brings are relatively limited.

Due to compliance issues, tightening of some fiat currency channels in June is also one of the reasons for the overall transaction decline.

It is worth noting that we interviewed the executives of nearly 30 exchanges and found that they all have a positive attitude towards the market in the second half of the year. There are many reasons: the emergence of new hot assets, more deposit channels, the increase in the focus of institutions on cryptocurrency, the beginning of certain laws and regulations and so on.

But these factors belong to the market sentiment category. Emotional factors can indeed affect future trends, but the results are also very limited.

Finally, we would like to say that many key issues in the market have not been resolved, such as: lack of targeted compliance framework, decentralized liquidity of different trading markets, lack of custody leading to opaque assets, manipulation, endless wash trading and manipulative behaviours still exist in the market.

At a stage when it is difficult to help promote market progress and growth, we hope that investors will identify risks and be cautious when making any investment decisions.

Executive Summary

① The total spot trading volume of cryptocurrency in the second quarter of 2020 was $5.44 trillion, down 18% from the first quarter of 2020.

② Analysis of BTC price and the Nasdaq Composite Index (^IXIC) shows that hot money may have undergone a small-scale switch between the US stock market and the cryptocurrency market, but it still hesitates to enter the spot trading of cryptocurrency.

③ The market value of BTC has accounted for more than 65% of the overall market value of cryptocurrency for a long time, but the BTC trading volume fell to 39.9% this quarter. The extremely high market value ratio of BTC and its low trading volume ratio are misaligned, the narrow range of shocks cannot attract funds to enter the market, which further lags the market development.

④ This quarter's centralized spot exchange fee income is estimated to be $472 million, which remains the industry's profit center.

⑤ The cryptocurrency spot industry is far less competitive than the derivatives industry. Exchanges such as ZB seize the opportunity to focus on the spot market layout.

⑥ The volume of decentralized exchanges in this quarter reached $191.4B, which is about the same as the second quarter in 2017 of centralized exchanges, lagged behind of the centralised counterparts roughly three years.

⑦ In a dynamic market, different types of assets should have a significant rotating effect. The analysis shows that the turnover of well-known projects in the cryptocurrency spot industry is roughly the same. This phenomenon shows that the cryptocurrency market has a high degree of unity before the application scenarios with a variety of blockchain solutions get truely adopted.

⑧ Except for the United States, Ukraine, Russia, the UK, and China, there is no other single country that can acquire 2M visitors to the exchange quarterly.

1. IndustryUpdates


① Coinbase invested US$1.1 million in Uniswap and PoolTogether;

② The original BHEX exchange strategy was upgraded to HBTC hobbit, the platform currency HBC and its own public chain were launched;

③ Binance announced the acquisition of CoinMarketCap for $400 million;

④ Gemini launches Dai;

⑤ Poloniex went down twice during the month;


① In order to protect investors, ZB concealed 24 trading pairs with poor liquidity, They had hidden nearly 40 trading pairs with poor liquidity in its early stage;

② FTX, Poloniex, and BitMax simultaneously launched the panic index BVOL;

③ Bitfinex  applied for a subpoena in the US court, seeking to recover USD 850 million of client funds that had been seized;

④ Intercontinental Exchange spent nearly $300 million to acquire Bridge2 Solutions for Bakkt;

⑤ Following BitMEX, Deribit stopped providing services to Japanese users;

⑥ Binance raised USDT daily lending rate to 0.04%;

⑦ Coinbase went down during the short-term market decline;

⑧ Huobi Global announced that the HT destruction cycle will be maintained "on a monthly basis";

⑨ CoinMarketCap updates the exchange ranking system that includes network traffic indicators, and its ranking is controversial;

⑩ bitFlyer reported a net loss of US$7 million in 19 years;


① Nomisma is approved to trade cryptocurrency derivatives in the EU;

② Coincheck encountered a data breach crisis, and customer assets have not been affected;

③ Coinsquare may use automated trading software to forge trading volume;

④ The total amount of ETH balance held by the exchange reached a new low;

⑤ Former BitMEX COO Angelina Kwan joins Deribit's investor board of directors;

⑥ Ebang International plans to launch the BTC exchange in 2020.

2. Industry landscape

3. Trading

3.1 Trading volume in the broader crypto market

As of June 31,2020,TokenInsight has included and studied more than 300 cryptocurrency spot exchanges. Because the data of some small exchanges is unstable or their authenticity is difficult to determine, this quarterly report includes 295 exchanges, including 279 centralized exchanges and 16 decentralized exchanges, with a view to making a more comprehensive and accurate research for this industry.

‘ Total quarterly spot trading volume of cryptocurrency decreased to $5.44 trillion, the market lacked effective hot spots

19Q2-20Q2 Quarterly spot market volume,Source:TokenInsight

In the second quarter of 2020, the total spot trading volume of cryptocurrency was $5.4 trillion, with a year-on-year increase of 25% from the second quarter of 2019 and a decrease of 18% from the first quarter of 2020.

20Q2 spot market volume and BTC price,Source:TokenInsight

This quarter's spot trading volume and BTC price correlation coefficient fell to -0.17, showing an insignificant negative correlation; the data was as high as 0.78 throughout 2019. As the core of the cryptocurrency world, BTC began to fluctuate within a narrow range from the end of May 2020; at the same time, the spot trading volume of the entire market entered the downward range.

The spot trading volume of the whole market in June 2020 decreased by more than 56% compared with May, which was the largest single-month decline since December 2018.

The data in this group shows that due to the insufficient cash-making effect of cryptocurrency, it is impossible to maintain a high level of trading volume. Currently, the cryptocurrency spot industry lacks hot spots and imagination.

20Q2 Monthly spot market volume,Source:TokenInsight
In the second quarter of 2020, users' willingness to trade decreased by about 15% compared with the previous quarter."——HOPEX Zhang Xiaoleng

‘ Data shows that hot money may be eager to enter the cryptocurrency spot market

This quarter, the BTC price and the Nasdaq Composite Index (^IXIC) were significantly positively correlated (correlation coefficient: 0.87); meanwhile, the BTC volume and the Nasdaq Composite Index component volume were not significantly negatively correlated (correlation coefficient : -0.45).

Comparison of BTC price and trading volume with the Nasdaq composite index and its component trading volume,Source:Yahoo Finance;TokenInsight

Recently, some traders may have felt the strong correlation of BTC market and the US stock market, and this set of correlation coefficients proves that this relationship does exist. The unobvious negative correlation volume indicates that hot money may have undergone a small-scale switch in the US stock market and the cryptocurrency market, but it is still hesitant about entering the cryptocurrency spot transaction. Specifically, when US stocks shrank, some hot money began to conduct cryptocurrency transactions (incremental), but did not show a strong (ie, strong negative correlation) willingness to enter.

"The correlation between cryptocurrency and the trend of US stocks will continue to be maintained in a short time, and the hot money in the market will participate in the trading of US stocks and cryptocurrency at the same time."——Deribit Lin

Externally, due to the panic caused by COVID-19, the global economic environment is weak, and the cryptocurrency industry is not immune to this.

Internally, the market share of BTC remains at 65%, and the industry has no breakthroughs. At present, the internal and external environment has caused a continuous decrease in the popularity of the cryptocurrency spot industry.

Market share of BTC this quarter,Source:TokenInsight

‘ BTC trading volume drops to 40% of the whole market, market activities depend on popular projects

Although the market value of BTC accounted for more than 65% of the overall market value of cryptocurrency for a long time, the BTC trading volume fell to 39.9% of the total spot trading volume in this quarter; of which, June accounted for only 37.8%. The extremely high proportion of BTC's market value and its relatively low proportion of trading volume are misaligned, and the narrow range of shocks cannot attract funds to enter the market, which further lags the overall development of the market.

20Q2 BTC trading volume as a percentage of total spot trading volume,Source:TokenInsight

In a dynamic market, different types of assets should have a significant rotating effect. However, in the cryptocurrency market, the turnover of well-known projects is roughly the same. This phenomenon shows that, with diverse application scenarios haven’t been realized, the cryptocurrency market has a high degree of unity

Comparison of volume trends in Jun.2020 of cryptocurrency projects,Source:TokenInsight

(as shown on the left) today; in other words, the current cryptocurrency market is still in its infancy. As shown in the figure below, while the high unity of the market causes the volume of BTC rises, the volume of other major cryptocurrency does not increase significantly, and most of the new funds flow into BTC. The sharp decline in the volume of BTC will force the remaining major digital assets to shrink significantly, then funds flow out of the cryptocurrency spot market.

20Q2 Comparison of five major cryptocurrency trading volumes,Source:TokenInsight
Cryptocurrency spot needs to be activated by new projects or star projects."——BigONE Cheng Jun

3.2 Volume of centralized exchanges

3.2.1 Overall trading activities

‘ This quarter's centralized spot exchange turnover was $5.25 trillion, and fee income was estimated to be $472 million

In the second quarter of 2020, the market-wide centralized spot exchange reported turnover is $5.25 trillion, with a decrease of 18.9% from the previous quarter ($6.47 trillion). Despite the decline in trading volume, based on an average handling fee of 10,000 10,000 and a real trading volume level of 30%, this quarter's centralized spot exchange fee income is estimated to be $472 million, which remains the profit center of the industry.

20Q2 Spot volume and confidence interval of centralized exchanges,Source:TokenInsight
20Q2 Top 25 spot volume of centralized exchanges,Source:TokenInsight;
*Transaction mining and other modes have a certain impact on the TI wash trading analysis model

3.2.2 Performance of key exchanges

‘ The cryptocurrency spot industry is not as competitive as derivatives, and exchanges should lay out strategies in terms of spot trading

Making false transactions and obtaining users through extremely high trading volume is a common operation method for cryptocurrency centralized spot exchanges. In order to remove the noise of wash trading volume, TokenInsight uses the following standards for the filtering of key exchanges:

① The spot exchange's TokenInsight exchange rating needs to be above B;

② In the monitoring results of brushing volume of TokenInsight, the real exchange volume ratio must always be higher than 60% in 2020Q2;

③ This spot exchange has public APIs that can be traced back in volume history.

In the end, a total of 11 spot exchanges passed the filtering, and these exchanges will be the key targets for this quarterly report:Binance, Huobi Global, OKEx, ZB, HBTC, Coinbase Pro, Bitstamp, KuCoin, Gate.io, Kraken and Poloniex。

The daily spot trading volume of the above exchanges in 2020Q2 is shown in the chart below.

20Q2 Volume of key exchanges(unverified),Source:TokenInsight
"As the volume increases, the volatility of the cryptocurrency spot market will only get smaller and smaller."——Huobi Futures Tom
20Q2 Monthly volume of key exchanges(Unverified),Source:TokenInsight

Unlike the key exchanges in the cryptocurrency derivative industry, which accounted for nearly 50% of the transactions, the spot exchanges accounted for 11%. The market share of the single spot exchange with the highest volume (Binance) (2.69%) is much lower than the market share of the single derivative exchange with the highest volume (Huobi Futures) (19.98%).

20Q2 Market share of key exchanges(in volume),Source:TokenInsight

Since 2020, exchanges have continuously shifted their focus to derivatives trading. The average derivatives trading volume of the top three (in volume) of key exchanges was 4.4 times that of spot trading; the derivative/spot ratio of Huobi Global/Huobi Futures increased by 3.7 times this quarter to 7.26 times. At the same time, the turnover of contract was 0.53 times more than that of the spot.

2020Q2 Total transactions of spot and derivative,Source:TokenInsight
"On the spot side, all 90% or more of the trading volume of small transactions is false, while large exchanges are gradually reducing brushing."——AAX Thor

The set of data shows that the current competition in the cryptocurrency spot industry is far less fierce than in the derivatives industry. Exchanges can adopt tactic of avoiding the majority, away from the derivatives contract chaos, and accumulating user base in the spot trading industry. For example, key exchanges such as ZB have concentrated their business focus on spot trading, and they are expected to achieve rapid growth in the second half of 2020.

20Q2 Derivatives/spot ratio of the top three (by volume)  key exchanges,Source:TokenInsight
"In the third and fourth quarters of 2020, the spot exchange industry is very imaginative.”——ZBG Xiangxiang

3.3 Volume of decentralized exchanges

‘ The volume of decentralized exchanges in this quarter reached $191.4B, which is about the level of the second quarter of the centralized exchanges in 2017

[1]:At present, the definition of decentralized exchanges (DEX) in the cryptocurrency industry is not uniform.
For more information about decentralized exchanges, please refer to "DeFi Industry Research Report-Part1 DEX for the first half of 2020".
Comparison of trading volume between decentralized exchanges and centralized exchanges,Source:TokenInsight

Etherflyer accounts for approximately 96.6% of the volume of decentralized exchanges. There is controversy in the industry as to whether Etherflyer is a truly decentralized exchange; its function of connecting external wallets conforms to the characteristics of decentralized exchanges, but it still uses a centralized order matching mechanism. However, no matter how Etherflyer is defined, its trading volume has shown that the decentralized exchange industry has a certain development space in the future.

20Q2 Volume of decentralized exchanges (except Etherflyer & Dex Trade),Source:TokenInsight

3.4 Summary

In summary, the overall development of the spot market in the second quarter of 2020 is not as good as in the first quarter. In April, the price of BTC started to rise from around $6,000 and reached the first line of $9,000 in May. Subsequently, the price of BTC fluctuated greatly, and it once exceeded $10,000, and the lowest was about $8,500. Rising and volatile led to active spot trading in the first two months of the quarter, but the market was deserted in June due to reduced volatility.

The impact of COVID-19 on the economy has also spread to the cryptocurrency market; Bitcoin price fluctuations in Q2 showed a clear correlation with the US stock market. This should be good news for cryptocurrency, which shows that cryptocurrency are gradually attracting the attention of traditional funds. The performance of the compliant cryptocurrency fund issued by Grayscale in the United States in Q2 also confirmed this; its Ethereum fund issued in the second quarter had a maximum premium of 1,000% compared to the market price.

As far as the later development of the spot market is concerned, TokenInsight Research interviewed relevant leaders of nearly 30 exchanges and found that the vast majority of interviewees are optimistic about the spot market in the next quarter and even the second half of the year.

The market low volatility in June made the industry urgently to discover new hot spots, and DeFi, which began to heat up in the middle and late quarter of Q2 2020, just pointed out the direction for the market. After the support of Coinbase, Compound was sought after by more exchanges. In addition to DeFi, Filecoin is also expected by the market. Although there is currently no spot market for Filecoin, its futures market has begun to heat up, and many institutions are betting on Filecoin.

One of the most significant characteristics of the cryptocurrency industry is its short cycle and short memory. Many exchanges have begun to emphasize, develop, publicize, and attach importance to the DeFi and Filecoin tracks, and the market will inevitably be hot for a while. But is this fierce sustainable? Does the fast-growing bubble have suitable application scenarios and value to support? History is always repeating itself. If not, it is foreseeable that the cryptocurrency market will explode because of hot spots, but after a short period of emotional upsurge, its ending will inevitably be "one place."

The tide receded before anyone knew who was "naked swimming." If market participants still compete on "drumming and passing flowers to see who runs faster", then these hot spots will not bring long-term positive effects to the entire industry. Market sentiment may bring about small-scale quotes; however, problems such as false transactions, capital security, and limited incremental users remain unsolved. Only when these core issues are resolved can cryptocurrency usher in real market conditions.

4. Platform Coin

4.1 Volume and price of exchange token

‘ Traders have high enthusiasm for the exchange token, and the good fundamentals of the exchange are the driving force for the price increase in the future

Recalling the above, the cryptocurrency spot market turnover was $2,018B, $2,383B, and $1,040B in April, May, and June 2020 respectively; monthly changes were 18.09% and -56.36%.

20Q2 Turnover of key exchange tokens,Source:TokenInsight

In June 2020, the mainstream cryptocurrency continued to fluctuate within a narrow range, leading to a decline in investor trading willingness. Unlike the overall market trading volume reduction of nearly 60%, the trading volume of the main exchange token in June was slightly lower than that in May, which was 45%.

20Q2 Price changing of key exchange tokens,Source:TokenInsight

4.2 Analysis of exchange tokens

Although the decline in platform currency trading volume this quarter is lower than the overall level of the spot market, the secondary market performance of such assets is relatively ordinary and can not effectively stimulate investors' trading willingness.

It is worth mentioning that the platform currency HBTC Captain Token (HBC) issued by the HBTC exchange (formerly BHEX) rose by 234% this quarter, making it one of the hottest projects in the cryptocurrency spot industry. HBC represents the core rights and interests of HBTC, HBTC Chain and BlueHelix Cloud products.

TokenInsight's interview records with the exchange show that some exchanges have good expectations for new spot market projects in late 2020. Most of the exchange tokens have the property of being used for spot trading fee repurchase and destruction. If various new projects bring considerable fee income to the exchange in the third and fourth quarters of this year, the exchange tokens could gain some upward price momentum.

20Q2 Price trend of key exchange tokens(standardized),Source:TokenInsight
"The second quarter of 2020 is not as expected, because Bitcoin halves out of the bull market, and the bull market may take the third quarter to the fourth quarter to appear.”——ZB Ma Ou

5. Regulation


① The Canadian Securities Administration (CSA) has issued guidelines for cryptocurrency exchanges;

② The 5th European Union Anti-Money Laundering Directive (5AMLD) came into effect and has been applied to cryptocurrency exchanges;

③ Japan’s Financial Services Agency: In order to conduct cryptocurrency derivatives transactions, you must apply for registration in advance


① Switzerland has stepped up supervision, requiring cryptocurrency exchanges to identify customers for transactions over US$1,000;

② The International Securities Regulatory Commission issued a report saying that it looks forward to stricter supervision of cryptocurrency exchanges;

③ The Singapore Court of Appeal rejected the Quoine Exchange Appeal because of its illegal reversal of the transaction;


① CFTC, the highest regulator of US financial derivatives, specifies the parameters used for physical delivery of cryptocurrencies;

② South Korea promulgated the Amendment Law of the “Report and Use of Specific Financial Transaction Information Act” to allow the application of AML and CFT rules to cryptocurrency exchanges;

③ Several exchanges were granted PSA exemption licenses by the Monetary Authority of Singapore;


① Japan implements a revised bill that requires opening two KYC documents to open an account on a cryptocurrency exchange;

② The US Securities Regulatory Commission postponed the approval of the cryptocurrency exchange under the Overstock subsidiary;


① Affected by the new Dutch regulatory policy, the cryptocurrency exchange BitKassa closed on May 17;

② The Cayman Islands government promulgated the "Virtual Assets (Service Provider) Act 2020";

③ The US Securities Regulatory Commission postponed the approval of the cryptocurrency exchange under the Overstock subsidiary;


① The cryptocurrency exchange is legally recognized as a money service business (MSB) in Canada and needs to be registered with the financial regulator FINTRAC;

② The Fed chairman supports the replacement of Libor with Ethereum-based exchange products.

6. Users & Popularity

6.1 Exchange Website Popularity

‘ Webpage popularity represents professional users' attitude towards the exchange

Most word asset exchanges support mobile-end transactions, web-end transactions, and API transactions. Among them, web-end transactions and API (REST) transactions are counted in the exchange's main and API visits. Therefore, the popularity of the exchange's web page can roughly represent the attitude of professional users (i.e., desktop traders and API traders) towards the exchange. In other words, if an exchange has a higher number of independent visitors (UV), it means that professional users are relatively recognized by the exchange.

0Q2 Average daily independent visit and browsing time of key exchanges,Source:Siteprice.org;TokenInsight

As shown in the chart above, Binance, Coinbase Pro, OKEx, ZB, and Kraken have obtained 77% of independent visitors from key exchanges; these exchanges may have a higher user base and a higher proportion of professional users.

6.2 Exchange Mobile App popularity

‘ The penetration of mobile apps is different among different regions.

TokenInsight's interviews with relevant persons in charge of various exchanges show that the proportion of mobile users is quite different in Asia and other regions; among them, mobile users in Asia are about three times that of webpages, and about one third of webpage usages in other regions.

Because various exchanges often use Google Play, App Store, enterprise signatures and Test Flight to provide mobile apps, it is difficult to verify the actual number of mobile users of the exchange. [2]TokenInsight counts the real-time user access of various exchanges here to see the distribution of exchange mobile users under the Chinese system.

[2]:Real user statistical standards:Sort by the number of followers from high to low, take the top 100, and record the exchanges they access to the real market.
20Q2 Real Exchange User Access in Key Exchanges,Source:BiCoin;TokenInsight

Because the real app only supports 11 exchanges for real access, the picture on the left can only be used as a rough statistical reference. There is currently no way to accurately calculate the popularity of mobile users on the exchange. For more detailed information about the distribution of mobile users on the exchange, please refer to "2020 Q2: Exchange Leaders' Views" released by TokenInsight.

6.3 Community popularity

Limited by the overall performance of the spot market this quarter, the number of Twitter followers on major exchanges increased by an average of only 2.03% from the previous quarter; Binance showed a negative growth of -2.40%.

20Q2 Twitter Statistics of Key Exchanges,Source:Twitter;TokenInsight

6.4 User source analysis

‘ The United States, Ukraine, Russia, the United Kingdom and China are the key markets for exchanges

TokenInsight analyzes the user source regions of key exchanges. The data shows that apart from the United States, Ukraine, Russia, the United Kingdom and China, no other single country or region can acquire 2 million orders of quarterly visitors to the exchange. In other words, with the exception of the above five countries, the remaining single geographic market shares are all below 5%.

20Q2 User Source of key exchanges,Source:Similarweb;TokenInsight

CEXQuarterly ReportMarket Analysis
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