Bitget Derivatives Exchange Report: Three Macro Trends Impacting the Growth of Crypto Platforms
Bangalore, DATE 2022 – Leading global derivatives exchange – Bitget has released a joint report with Boston Consulting Group (BCG) and Foresight Ventures around the growth and observations of crypto trends.
Bitget’s in-depth industrial report “What Does the Future Hold for Crypto Exchanges”, dives into the competitive landscape of crypto exchanges, as it unveils substantial development trends in crypto trading markets. It shows how these CeFi products enable the Web3 economy and shares insights on how to navigate the crypto space during a bear market. An important section of the report are the macro trends impacting the growth of crypto platforms, details of which are as follows:
Sophistication of market with increased institutional participation
- While the global quarterly spot trading volume grew sevenfold to $3.2 trillion in the two years to the first quarter of 2022, crypto derivatives trading expanded twelvefold to $6.3 trillion in the same time frame.
- Institutional investors, mostly prop trading firms, are drawn to derivative trading mainly because of the flexibility to apply more trading strategies, higher capital efficiency, better risk management as well as tax efficiency.
Rapid development of Web3 applications leading to the increase in trading volume of altcoins
- Web3 applications, leveraging blockchain technology, increase the utility of crypto in real-life applications. Number of applications increased from ~800 in 2017 to ~10,000 today
- Crypto exchanges are key to enable the Web3 ecosystem by providing liquidity. In some cases, centralised exchanges can also take on the responsibility of providing infrastructure for crypto custody via exchange custodial wallets.
- To illustrate the emergence of web3, over 70% of the spot trading volume increase between 2020 and 2021 was driven by non-BTC and ETH tokens
Emerging markets leading the way in crypto adoption; significant increase in trading volume in 2021
- Emerging markets and advanced APAC countries accounted for 1/3 of global spot trading volumes and around 40% of global derivative trading volumes in 2021.
- Spot trading volume in MEA, LatAm and APAC rose from 26% in January 2021 to 32% in December 2021. Derivatives volume share in the same region grew from 39% to 42%
- Crypto penetration in some emerging markets is already higher than in developed countries; For example, crypto 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 global players to expand into, due to higher market potential and relatively more progressive and certain crypto regulations.
- Some use cases in emerging countries go beyond just being an investable asset: it could range from remittance to crypto-backed payments as a cheaper alternative to traditional financial infrastructure.
- The future of work coordinated by decentralised autonomous organisations (DAOs) will unlock new collaboration use cases
The report offers an intensive study on the developing environment for crypto exchanges from different lenses, such as a thriving derivative market, momentums of rapid trading volume growth, regulation impacts and innovative applications. It also brings a forward-looking view on the end-state competitive landscape, as well as perspectives on growth avenues for crypto exchanges.
For full report, please visit here