Short-term scenario for the cryptocurrency market remains gloomy: Reports
The crypto market had one of the worst quarterly results during Q2 2022. All major cryptocurrencies fell hard during this period. Bitcoin [BTC] and Ethereum [ETH] headlined the steep decline in the state of the crypto market. The fall in asset prices has also resulted in a change in asset distribution patterns across investors.
A falling giant
Boston Consulting Group released a report on the future of crypto exchange with Bitget and Foresight Ventures. The report attempts to capture the various aspects of crypto trading across the crypto market. Increasing crypto adoption and macro trends have led to a sharp increase in global crypto trading volume.
According to the report, the global centralized exchange volume reached $54 trillion in 2021. Historically, the spot trading volume correlates strongly with the total market capitalization and volatility of crypto. The massive increase in volume further reflects the growing interest in crypto-assets. According to Goldman Sachs, cryptocurrencies currently account for approximately 20% of the global “store of value” market. With the rise of institutional investors, there is a growing demand for hedging and generating returns. The report expects organized players to move into centralized options to support the growing demand. FTX’s acquisition of LedgerX is a signal of the growing trend.
A pattern of aggressive growth
Some regions have posted huge numbers for crypto trading in recent times. The Middle East is a lucrative region fueling crypto growth. The region accounts for 4% of global spot and derivatives trade value in 2021. Israel remains an attractive platform with its “mature financial market”. The report also highlights Turkey, the UAE and Saudi Arabia for their contribution to crypto trading in the region.
Moving over to South Asia, the region accounts for roughly 2-3% of global crypto trading. India, Thailand and Vietnam remain the largest contributors in terms of trade value. India represents the highest growth potential in the region with a high number of retailers. It is expected that growth will increase in the region with increasing regulatory clarity.
Problems exist in the current crypto economy and will continue to plague its development if unchecked. Along with the rising macro conditions, the short-term crypto scenario remains gloomy right now. However, the report ends on a positive note as senior members of the BSG remain optimistic about the crypto industry.
“Despite the recent market disruption, we believe the market has opportunities for growth going forward. As competition increases, crypto exchanges must adapt to the dynamic market situation and transform their strategy to beat the competition.” – Tjun Tang, Managing Director and Senior Partner, BSG.
