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Top Crypto Exchanges Monopolize the Market

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Top Crypto Exchanges

Top Crypto Exchanges Monopolize the Market

The largest and most reputable crypto exchanges are increasingly conquering the market, increasing their market share, and crowding out weaker competitors.

Top Crypto Exchanges

Top-ranked marketplaces such as Binance and Coinbase continue to push their second-tier and smaller competitors such as Coinhub or Bitexbook out of the market, according to a recent study by analyst firm CryptoCompare.

Redistribution of market share on exchanges

As experts found out, over the past 9 months, top crypto exchanges have significantly increased their market share. These include exchanges that offer traders a lower level of risk based on characteristics such as security, funds insurance, and quality of service.

The widening gap between these two categories of exchanges may be a sign that the crypto exchange market is becoming more resilient, say CryptoCompare analysts. Also, it can serve as an indication of attempts by many exchanges to improve the quality of services offered to customers.

CryptoCompare experts themselves have awarded the highest AA rating to only two exchanges – Gemini and Coinbase. They put Binance, Kraken, and Bitifinex one notch down with the result A.

According to a CryptoCompare study, in the last quarter of 2019, 68 out of 165 crypto exchanges could be classified as top-tier. At that time, they formed 32% of the total global turnover. In the 2nd quarter of 2020, this figure has already grown to 40%, and at the end of June, it was 46%.

Meanwhile, exchanges with a rating below B (C-E), which according to CryptoCompare are characterized by higher risk for traders, are steadily losing positions, losing their market share. If in the 4th quarter of 2019 they accounted for 68% of global trade volumes, then in June this figure was 54%.

Why is it too early for Top Crypto Exchanges to relax?

However, CryptoCompare warns that it is too early for even the top crypto exchanges to relax, as the industry as a whole is still plagued by security problems and low levels of risk protection.

Thus, only 15% of exchanges claim to store at least 95% of all client funds in cold wallets, which potentially significantly increases protection against hacker attacks and cyber attacks. Also, only 5% of cryptocurrency exchanges offer their clients one or another type of insurance.

Top Crypto Exchanges

Also, the study found that about 38% of exchanges, when carrying out more than 25% of transactions, “interact with structures characterized by a high level of risk”, such as representatives of the gambling business or sellers from the darknet. 44% of exchanges implement substandard or inadequate procedures as part of the know your customer (KYC) regulatory requirement.

Studies by country have shown that the lowest level of risk is typical for crypto exchanges in Japan, the USA, Australia, and South Korea. Russia was at the bottom of this rating.

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