According to a research by CryptoCompare, the “top-tier” exchanges boosted their market share to 96 percent in February 2022.
As the trading volume in crypto consolidates onto the platforms of only a few reputable organizations, the top centralized cryptocurrency exchanges have achieved all-time highs for market share this year.
According to statistics provided on Monday by UK analytics firm CryptoCompare, these so-called “top-tier” crypto exchanges boosted their market share from 89 percent in August 2021 to 96 percent in February 2022.
A total of 78 exchanges were given a “top tier” rating, with Coinbase, Gemini, Bitstamp, and Binance being the only four to get an AA.
According to the research, top-tier exchanges exchanged $1.5 trillion in February 2022, while “lower-tier” exchanges transacted $62 billion. This indicator, according to CryptoCompare, reveals that “both retail and professional traders are shifting to reduced risk exchanges.”
Exchange consolidation has occurred as a result of both exchange closures and acquisitions from bigger exchanges. Top crypto exchanges looking to expand internationally occasionally buy smaller exchanges that are already licensed and functioning in the target area, like FTX did with the Japanese Liquid Group exchange on February 2, 2022.
Since June 2019, 54 exchanges have shuttered owing to being uncompetitive in the market, causing additional user concentration to top-ranking exchanges, according to the business. Six Chinese-based exchanges were also forced to collapse as a result of China’s crypto crackdown, according to the analysts:
Volumes have begun to concentrate among the top tier exchanges, as we’ve seen, and this is a trend that will undoubtedly continue in the future. We predict an oligopoly of exchanges to dominate trade volumes as the market evolves, as their traction grows and smaller companies fall behind.
The paper outlined some of the issues that the cryptocurrency exchange business would face in the future, noting political pressure on exchanges to implement Russian sanctions as one area where greater action may be taken.
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“While many exchanges have defied this pressure,” the researchers noted, “the political component is a crucial risk to consider for exchanges’ future.”
The survey also mentioned the growing number of crypto users who choose to keep their funds in their own hands. “The motto of ‘not your keys, not your coins’ is becoming stronger under political pressure on exchanges,” according to the paper, which goes on to say that it’s a “trend that might hamper exchanges’ economic model.”