Fortune hailed Coinbase’s IPO as “a milestone in the cryptocurrency industry.” Similar to Netscape’s IPO announcement, which mentioned the legitimacy of the Internet, Coinbase’s forthcoming public offering to the public signals that cryptocurrency trading is legal, legitimate and safe in the SEC’s eyes. And now investors have the opportunity to own shares on the largest US cryptocurrency exchange.
As a result, investing in Coinbase is seen by many as an investment in the future of cryptocurrency trading. It is the largest cryptocurrency exchange in the United States, three times the size of its closest competitor in the United States. The most important thing in the United States is to be a world leader. Only this is not the case. Conventional wisdom and current market realities are very different.
To understand the nuances of the cryptocurrency trading platform, you need to understand some important facts.
These are important implications that determine the market’s current maturity and the challenges that institutional crypto traders face today. There is no single exchange that gives traders access to global trading markets, cross-price prices, best international prices, global liquidity or decentralized trading markets.
The marketing market for cryptocurrencies is still very fragmented, and there is no dominant player.
Together, the five largest cryptocurrency exchanges account for only 41% of the world’s total trading volume. Coinbase, the largest exchange in the United States, generates only 2.1% of the world’s volume. The United States is ranked 19th in the world. There is no dominant player in the global market, as we expect to see in a more mature market.
According to the data above, the NYSE’s share of global stock trading is more than 12 times that of Coinbase, and the two largest US stock exchanges account for more than 50% of the world’s daily trading volume, while the two largest US stock exchanges account for only 3% of it. global volume.
Compared with traditional equities, the cryptocurrency market is highly fragmented. The two largest exchanges account for 51% of the daily trading volume, while the three largest crypto exchanges account for only 27% of the daily trading volume.
There is no global trade market
The cryptocurrency market is still in its infancy. Based on my conversations with institutional traders and independent professional traders, I learned that organizations still require institutional traits that are not yet available on a single platform, such as:
Discover world prices – for example, world market prices are normal for the local currency.
Best Global Bids and Bids – Global order book measured for foreign exchange and local currency costs.
Global liquidity access – access to global liquidity, not just an exchange.
Each exchange is its own “lake” without a “channel” connecting it. In the US, a trader can only trade 2.1% of global users with a completely separate order book and differs from other US trading markets such as Coinbase and Kraken.
Global trading volume, liquidity and pricing are only available to those who can manage multiple accounts across multiple exchanges in different countries and on different continents. It is a complex task that connects both legal and technical resources.
It is clear that traders will benefit from a global order book, calculated in a single currency, to find out the best international prices along with the liquidity needed to execute large volume trades. The industry is desperate for the cryptocurrency equivalent of the best deals and offers for traditional securities.
Central stock exchanges are only part of the trading picture
Binance and Coinbase are centralized exchanges that match buyers ‘orders with sellers’ orders, execute trades and settle invoices. The properties of cryptocurrencies are held on an exchange and users only trade with other users on the same exchange. Even in general, central exchanges do not cover the entire volume of trading in digital assets.