Coinbase, the US-based cryptocurrency exchange, is no longer the most liquid platform for altcoins. According to new data released today, the popular exchange has been dethroned by Kraken in July, for the first time since April 2019. The data, released by crypto analytics firm CryptoCompare, reveals that Kraken has overtaken Coinbase in terms of altcoin liquidity among US customers, signaling a noteworthy change in the trading landscape.
1. Coinbase U.S. Exchange Volume Falls as Kraken Defeats Exchange for Most Liquidity in July
July saw a shift in the crypto exchange industry’s volume rankings as Kraken unseated Coinbase Pro as the most liquid major exchange in the U.S.
Coinbase Pro’s monthly quoted volume on its U.S. exchange dropped by 19.3% in July — from $1.51 billion in June to $1.22 billion for July — according to data from cryptocurrency and blockchain analytics firm Arcane Research. This pushed Coinbase Pro down to third on the monthly list of most liquid U.S. exchanges, behind Kraken in first and Binance.US in second.
Kraken moved up one spot to take up the number one spot in July, recording project quoted volume of $1.50 billion — a 10% increase compared to the previous month. Binance.US also increased its volume, from $1.27 billion in June to $1.32 billion in July.
Other noteworthy exchanges included Gemini and Huobi US, which both celebrated their respective one-year anniversaries in July. Gemini recorded the highest percentage increase of any exchange — 44.8% — to reach total monthly quoted volume of $274 million. Huobi US’s July figure of $187 million was a 24% increase on the previous month but fell short of breaking the company’s all-time high of $250 million in March.
- Coinbase Pro: $1.22 billion
- Kraken: $1.50 billion
- Binance.US: $1.32 billion
- Gemini: $274 million
- Huobi US: $187 million
Overall, the U.S. crypto exchange landscape saw an 8.5% rise in quoted traded volume compared to June. These figures demonstrate the increasing liquidity of the U.S. crypto exchange markets — but suggest that Coinbase Pro has lost the position of the largest and most liquid major exchange in the U.S.
2. Altcoin Activity Spikes, Accelerating Exchange Competition
Bitcoin Dominance Declines
Altcoin trading activity has spiked, with Ethereum, XRP, Litecoin and other coins seeing sizeable gains this week. This has caused Bitcoin’s dominance of the total crypto market to decline towards 50%.
The trading activity has been driven by the increasing competition among exchanges, with many offering discounts and incentives for trading. The unprecedented growth in the industry has also caused an influx of newcomers to the crypto market, many of whom are transitioning from traditional markets.
In addition to increased competition, the volatility of the crypto market has attracted investors looking to capitalize on the frequent price movements. This volatility has been further amplified by the uncertainty of regulatory decisions impacting the sector.
Exchange Offerings Become More Diverse
The array of exchange offerings has also become more diverse, with many exchanges focusing on derivatives, stablecoins and other services. These offerings have also been supplemented by the proliferation of decentralized exchanges, some of which offer services far beyond what their centralized counterparts provide.
Overall, the combination of increasing competition, diverse exchange offerings and higher trading volumes demonstrate how the crypto industry continues to evolve and mature. As altcoin trading activity continues to increase, we can expect more developments in the coming months, with exchanges continuing to innovate and adapt.
3. Kraken’s Rapid Growth Propels Exchange Past Coinbase
Kraken, founded in 2011, has quickly risen to become one of the premier cryptocurrency exchanges in the world. In the past year, Kraken’s volume has outpaced more established exchanges such as Coinbase. Kraken’s accelerated growth can be attributed to its focus on crypto-to-fiat trading volume, which has put it ahead of other top exchanges globally.
In 2020, Kraken saw its volume surge 500% year-over-year. Despite a tough market, the exchange now ranks as the 5th largest crypto exchange in terms of adjusted trading volume and the 2nd largest in terms of real trading volume, according to data from CoinMarketCap. Analysts believe the rapid development of its trading features and its ability to process trades in FIAT currencies are fueling the platform’s growth.
Using its advanced order book, Kraken allows for your trades to be settled in either crypto or FIAT currency. This is a major plus for traders who wanted to limit their exposure to volatile crypto assets. By making sure funds can be exchanged for FIAT currencies, Kraken is able to offer the stability needed in a market with volatile prices.
Additionally, with its low fees and tier based system, Kraken has been raising the bar for exchanges. Its low margin rate, paired with its fast withdrawal times make it an attractive option for traders. With these offerings, Kraken has seen its user base, trading volumes and fiat deposits significantly outpace other leading exchanges throughout the last year.
4. What Does Shift Mean for Crypto Exchange Market?
The arrival of institutional investors to the crypto space is gathering momentum like never before. The shift in mentality from traditional investors to the idea of taking a bet on digital assets is opening up a new avenue in the crypto exchange market.
Investment Potential
With the addition of traditional financial actors such as institutional investors, there are now increased opportunities for the crypto space. This includes access to larger sums of capital, which will play a role in supporting the development of projects, exchanges and infrastructure in the industry.
This in turn will most likely result in an increase in trading volumes. Booming prices combined with lucrative opportunity for traders, this creates a very attractive market for investors.
Increased Liquidity
The entrance of large investors means more money in the pool. Thus creating higher levels of liquidity for exchanges. Institutional investors trade large amounts of digital tokens, potentially in the range of millions of dollars. This type of liquidity has not been seen before. It is expected that the increased liquidity will make the trading process smoother and more cost-effective for traders.
Stability
The injection of large capital into the market caused by institutional investors will boost the stability of the crypto exchange market. With higher volumes of investment and trading activity taking place, the market should become less volatile. It should become less prone to market manipulation and more predictable.
This increase in stability has the potential to enhance the user experience, making the market more attractive for novice investors. It may lead to more long-term strategies to become commonplace.
Impact on Crypto Exchanges
The influx of institutional investors has the potential to usher in a positive wave for exchanges. Increased liquidity and more stable markets should make crypto exchanges more attractive for traders and users. This could lead to more active trading happening on such platforms, resulting in more trading fees and potential revenue for exchanges.
More importantly, this shift could lead to a greater confidence in the crypto exchange market. And it is likely to attract more players into the space in the long run.
The latest data analysis shows a major shift in the US altcoin exchange landscape, with Kraken now leading the way despite Coinbase’s longstanding position at the top of the market. July was an unprecedentedly successful month for Kraken, and their position as the most liquid US altcoin exchange is likely to remain strong going forward.