The cryptocurrency market recorded one of the worst quarterly performances during the second quarter of 2022. All major cryptocurrencies experienced a steep decline during this period. Bitcoin [BTC] and Ethereum [ETH] highlighted the sharp decline in the state of the cryptocurrency market. The decline in asset prices has also led to a change in the patterns of wealth distribution among investors.
A falling giant
Boston Consulting Group has released a report on the future of cryptocurrency exchanges with Bitget and Foresight Ventures. The report attempts to capture the various aspects of cryptocurrency trading in the cryptocurrency market. The growing adoption of cryptocurrencies and macro trends have led to an increase in the volume of global cryptocurrency trading.
According to the report, global centralized trading volume reached $ 54 trillion in 2021. Historically, spot trading volume has been highly correlated with overall market capitalization and volatility. The massive increase in volume further reflects the growing interest in cryptocurrencies. According to Goldman Sachs, cryptocurrencies currently represent about 20% of the global “store of value” market. With the emergence of institutional investors, there is a growing demand for hedging and generating returns. The report predicts that organized actors enter centralized options to meet the growing demand. FTX’s acquisition of LedgerX is a signal for the growing trend.
An aggressive growth model
Some regions have recently posted huge numbers for cryptocurrency trading. The Middle East is a profitable region that supports the growth of cryptocurrencies. The region accounts for 4% of the global value of spot and derivatives trading in 2021. Israel remains an attractive platform with its “mature financial market”. The report also highlights Turkey, the United Arab Emirates and Saudi Arabia for their contribution to the cryptocurrency trade in the region.
Turning to South Asia, the region accounts for around 2-3% of global cryptocurrency trade. India, Thailand and Vietnam remain the main contributors in terms of commercial value. India represents the highest growth potential in the region with a large number of retail traders. Growth is expected to pick up in the region with clearer regulations.
Problems exist in today’s crypto economy, and they will continue to hinder development if left unchecked. Along with escalating macro conditions, the short-term crypto scenario remains bleak at the moment. However, the report ends on a positive note as senior BSG members remain optimistic about the cryptocurrency industry.
“Despite the recent market disruption, we believe the market has growth opportunities ahead of us. As competition increases, cryptocurrency exchanges must adapt to the dynamic market situation and transform their strategy to beat the competition. – Tjun Tang, Chief Executive Officer and Senior Partner, BSG.