Bangalore, DATE 2022 – Leading Global Derivatives Exchange – Bitget has released a joint report with Boston Consulting Group (BCG) and Foresight Ventures on the growth and observations of crypto trends.
Bitget’s Detailed Industry Report “What does the future hold for crypto exchanges?“, delves into the competitive landscape of crypto exchanges, as it reveals significant trends in the development of cryptocurrency trading markets. It shows how these CeFi products enable the Web3 economy and shares insight on how to navigate the crypto space during a bear market. An important part of the report is the macro trends affecting the growth of crypto platforms, the details of which are as follows:
Market sophistication with increased institutional participation
- While global quarterly spot trading volume grew sevenfold to $3.2 trillion in the two years to the first quarter of 2022, crypto derivatives trading increased twelvefold to $6.3 trillion over the same time frame.
- Institutional investors, mainly trading firms, are attracted to derivatives trading mainly due to the flexibility of applying multiple trading strategies, greater capital efficiency, better risk management, as well as tax efficiency.
The rapid development of Web3 applications leads to an increase in the trading volume of altcoins
- Web3 applications, which use blockchain technology, increase the utility of cryptocurrencies in real-life applications. The number of apps has increased from ~800 in 2017 to ~10,000 today
- Crypto exchanges are key to enabling the Web3 ecosystem by providing liquidity. In some cases, centralized exchanges may also take responsibility for providing the infrastructure for custodial cryptocurrencies through the exchange’s custodial wallet.
- To illustrate the emergence of web3, over 70% of the increase in spot trading volume between 2020 and 2021 was driven by tokens other than BTC and ETH
Emerging markets are leading the way in cryptocurrency adoption; significant increase in trading volume in 2021
- Emerging markets and advanced APAC countries accounted for 1/3 of global spot trading volume and around 40% of global derivatives trading volume in 2021.
- The volume of spot trading in MEA, LatAm and APAC increased from 26% in January 2021 to 32% in December 2021. The share of derivatives volume in the same region increased from 39% to 42%
- Cryptocurrency penetration in some developing markets is already higher than in developed countries; For example, cryptocurrency penetration in Nigeria is over 40%, even higher than traditional banking penetration in the country.
- LatAm and APAC are the two most attractive regions for the expansion of global players, due to higher market potential and relatively more progressive and certain crypto regulations.
- Some use cases in developing countries go beyond just investing in assets: it can range from remittances to payments with cryptocurrencies as a cheaper alternative to traditional financial infrastructure.
- The future of work coordinated by Decentralized Autonomous Organizations (DAOs) will unlock new collaborative use cases
The report offers an intensive study of the evolving environment for cryptocurrency exchanges from various lenses, such as the thriving derivatives market, the momentum of rapid growth in trading volumes, the impact of regulation and innovative applications. It also provides a forward-looking look at the ultimate competitive landscape, as well as perspectives on growth paths for crypto exchanges.
For the full report, visit here