In cryptocurrency markets, liquidity is uber-concentrated and has become more so over time, with nearly all of it found on just eight exchanges.
The top eight platforms account for nearly 92% of depth — a measure of all bids and asks within 10% of the mid price — and 90% of volume, according to Kaiko. Binance, the largest crypto exchange, has this year accounted for more than 30% of global market depth and more than 60% of worldwide trade volumes. Besides Binance, the list also includes Coinbase, OKX and Huobi, among others. For context, there are hundreds of crypto exchanges, according to data from CoinGecko, though many of them see negligible or no trading at all.
“Highly concentrated crypto markets are both a good and bad thing. There is undoubtedly a shortage of liquidity, which when spread thin across many exchanges and trading pairs can exacerbate volatility and disrupt the price discovery process,” wrote Kaiko’s Dessislava Aubert and Clara Medalie in a note.
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