Despite cryptocurrencies having fallen off their record highs, the sector is expected to experience double-digit growth in trading volumes next year suggesting that trader enthusiasm in the nascent asset class has not waned.
According to research conducted by Satis Group, crypto trading volume will grow by over 50% in 2019. In the United States, the volume of cryptocurrencies traded will overtake the trading volume of corporate debt this year. And even more significantly, the trend shows that crypto trading volume is set to reach 10% of the equity trading volume in the world’s largest economy and home to the globe’s biggest stock market. Currently, the volume of U.S. equities is estimated to be over US$74 trillion while that of crypto trading is US$7.3 trillion.
The dominance of bitcoin as a base pair for trading cryptocurrencies is also set to continue, per the report. Currently, bitcoin is the base pair for 33% of all the crypto volume traded across the globe with Tether coming second at 22% while Ethereum is third at 12%.
As for the fiat currencies, the United States dollar enjoys the biggest share of the market as a base pair at 48% while the Japanese yen is second at 27%. The Euro and the South Korean won enjoy single-digit market share at 9% and 7% respectively.
With the expected growth in the crypto trading volume, exchange trading fees will also naturally increase. From a figure of US$2.1 billion estimated to have been generated in exchange trading fees last year, the amount is expected to rise to more than US$3 billion in 2018. This is despite the bearish conditions which have persisted this year.
“Assuming blended fees based on volume of the top 20 exchanges by size, we estimate over $2.1B in trading fees gathered last year across global exchanges. We estimate this number to grow to well over $3B in 2018,” wrote Sherwin Dowlat, the lead researcher of the report.
Biggest Exchanges Making a Killing
Interestingly, the trading fees generated by crypto exchanges last year was almost on par with the US$2.2 billion generated by global equities and US$2.6 billion generated by retail brokers demonstrating how lucrative the cryptocurrency exchange business is. This growth in trading fees generated by cryptocurrency exchanges has been attributed to an increase in the number of institutional investors as well as growing retail adoption.
However, how this growth in trading fees will be shared out amongst the existing exchanges will be skewed heavily in favor of the large established firms. According to the Statis report, more than three-quarters of the total trading volume in the crypto market goes to the leading 20 exchanges.
Among the exchanges ranked in the top 20 category by Statis includes Binance, Bitfinex, Bithumb, Bitmex, Coinbase Pro, HitBTC, Huobi and OKex. With regards to the market share, Binance enjoys roughly 14% of the trading volume while OKex gets 12% while Huobi’s figure is 9%.