Bitget, in conjunction with Boston Consulting Group (BCG), and Foresight Ventures has released a report tagged: ‘What Does the Future Hold for Crypto Exchanges’, which dives into the competitive landscape of crypto exchanges, unveils development trends in crypto trading markets, its role in enabling the Web3 economy, and shares insights on how to navigate the crypto space during a bear market.
The report which offers a study on the developing environment for crypto exchanges from different lenses, such as a thriving derivatives market, momentums of rapid trading volume growth, regulation impacts, and innovative applications, also brings a forward-looking view on the end-state competitive landscape, as well as perspectives on growth avenues for crypto exchanges.
“This report shines a light on the recent developments of the crypto market, with keen insights revolving around crypto exchanges and the future paths of winning operations. We continue to witness tremendous enthusiasm from investors despite such market conditions,” Gracy Chen, Managing Director, Bitget, said.
According to the findings of the report, crypto trading volume still has large headroom to grow, while LATAM and APAC remain the two most attractive regions for global players to expand into, due to higher market potential and progressive crypto regulations.
“This is the same view echoing our developing strategy, as these two regions are among those of our primary focus. Meanwhile, we will continue to enhance our products with creativity and innovation, boost adoption of crypto trading and social trading, with the vision to increase financial independence for the rest of the world,” Chen said.
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The global centralised crypto trading volume was $54 trillion in 2021. Spot trading volume was $20.6 trillion, more than 2,000 times 2016 volumes. Historically, spot trading volume strongly correlates with overall crypto market capitalisation and volatility.
“Despite the recent market disruption, we believe the market has opportunities for growth ahead. Crypto exchanges play a key role in the Web3 ecosystem by providing access, liquidity, and infrastructure. With competition intensifying, crypto exchanges must adapt to the dynamic market situation and transform their strategy to beat the competition,” Tjun Tang, Managing Director and Senior Partner of BCG, said.
In the report, perspectives on the future of Web3 adoption, emerging high-potential markets, the crypto exchange competitive landscape, and future end-state, was also highlighted.
Three macro trends impacting the growth of Crypto Exchanges include sophistication of the market with increased institutional participation, rapid development of Web3 applications leading to the increase in trading volume of altcoins, and emerging markets leading the way in crypto adoption, an icrease in trading volume in 2021.
Spot trading volume in MEA, LatAm, and APAC rose from 26 percent in January 2021 to 32 percent in December 2021. Derivatives volume share in the same region grew from 39 to 42 percent.
According to the report, crypto penetration in some emerging markets is already higher than in developed countries. Crypto penetration in Nigeria is over 40 percent even higher than traditional banking penetration in the country.
“We highlight unique growth opportunities that crypto exchanges can explore, strengthening and scaling core offerings, expanding into adjacent products and offerings, developing innovative business models, and leading the way in bringing Web3 solutions to traditional industries,” Chen said.
Experts expect higher crypto derivative growth, reflecting more advanced financial markets with mature regulatory environments regarding derivatives. The overall crypto derivative-to-spot ratio is expected to get closer to those observed in traditional equity markets.
Crypto exchange landscape is concentrated with the top five crypto exchanges accounting for around 70 percent of the spot trading volume and around 90 percent of the derivative trading volume in 2021.
