During Q2 of 2022, the crypto market had one of its worst quarters ever. During this time, all major cryptocurrencies dropped hard. The state of the crypto market saw a steep decline led by bitcoin [BTC] and ether [ETH]. Changing wealth distribution patterns among investors have also been caused by the fall in asset prices.
A falling giant
Using Bitget and Foresight Ventures as partners, Boston Consulting Group released a report on crypto exchanges. In this report, the various aspects of crypto trading are examined across the crypto market. A sharp rise in global crypto trading volume has been attributed to increasing crypto adoption and macro trends.
In 2021, the global volume of centralized exchanges was $54 trillion, according to the report. There is a strong correlation between spot trading volume and crypto market cap and volatility historically. Further evidence of crypto assets’ increasing popularity can be found in the massive increase in volume.
Approximately 20% of the global “store of value” market is currently made up of cryptocurrencies, according to Goldman Sachs. Hedging and yield generation are becoming more important due to the emergence of institutional investors. In order to meet the growing demand, organized players are expected to enter centralized options. The acquisition of LedgerX by FTX indicates the trend is growing.
A pattern of aggressive growth
In recent years, some regions have seen a tremendous increase in crypto trading. There is one lucrative region bolstering crypto growth in the Middle East. A total of 4% of global spot and derivatives trading value will be traded in this region by 2021. The “mature financial market” of Israel continues to make it an attractive platform. Additionally, the report highlights Saudi Arabia, the United Arab Emirates, and Turkey as regions that contribute to crypto trading.
Taking a look at Southern Asia, the region accounts for about 2-3 % of global crypto trading. The largest contributors in terms of trading value continue to be India, Thailand, and Vietnam. Among the countries in the region, India has the highest potential for growth due to its high number of retail traders. As regulations become more clear, it is expected that growth in the region will increase.
Currently, the crypto economy faces problems that will continue to hamper its development if left unresolved. Due to the intensifying macro environment, the short-term crypto scenario is bleak at the moment. In spite of this, the report ends on a positive note as senior members of BSG remain optimistic about the industry’s future.
“Despite the recent market disruption, we believe the market has opportunities for growth ahead. With competition intensifying, crypto exchanges must adapt to the dynamic market situation and transform their strategy to beat the competition.” – Tjun Tang, Managing Director & Senior Partner, BSG.
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