The first half of 2023 has been marked by numerous downturns, with regulatory compliance events being a major contributing factor. While many exchanges like Hotbit exited the market, a few managed to maintain a strong presence and capture a significant share, particularly in terms of spot volume.
According to Coinmarketcap (CMC), a well-known crypto market tracker, their 1st half report for 2023 reveals that ten exchanges controlled the market share, with five out of these ten accounting for 85% of the total share. The top five crypto exchanges were Binance, Bitforex, OKX, Coinbase, and LBank.
Throughout H1 2023, Binance remained the dominant player in the market, accounting for 59.99% of the total spot trading volume. Interestingly, when compared to the same period last year, the exchange demonstrated relative stability.
The top 5 exchanges accounted for around 85% of the total spot market volume. In terms of liquidity and 24-hour trade volume, Binance, Coinbase, and one other exchange stood out, with the highest average liquidity score exceeding 700.
During the second quarter of the first half of the year, the top 20 exchanges, as ranked by CoinMarketCap, accounted for a total of $1.67 trillion in spot trades. However, this figure was far from impressive, as it reflected a significant 36% drop compared to the previous quarter (Q1). Looking at the active market trading activity of $2.6 trillion in Q1, the Q2 decline was a notable slowdown.
However, the current trade volume in Q3 is influenced by market conditions that emerged after the FTC crash during the recovery phase.
In addition, Binance dominated liquidity in the large-cap space by listing high-quality mainstream coins. BitForex and Bitget are also highly active in adding new coins, especially during the memecoin season from April to June 2023.
Following the FTX saga, the development of proof of reserve has become commonplace among exchanges. According to the CMC report, the top three exchanges with the highest Proof of Reserve assets are Binance ($57 billion), OKX ($10 billion), and Bitfinex ($10 billion). The majority of the assets held in reserve consist of Bitcoin and stablecoins.
As FUD continued to grip the market and Binance faced an ongoing battle with the U.S. SEC, the exchange experienced a significant outflow of capital, resulting in its reserves dwindling to $20 billion. Despite this, Binance remains the exchange with the highest proof of reserve assets.
In H1 2023, the majority of the exchange’s tokens saw positive net returns. However, according to the CMM H1 report, most of them were unable to outperform Bitcoin (+182% YTD).
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