A recently conducted study has found that despite a persisting bear market in 2018, the cryptocurrency markets will still likely see tremendous growth in trading volume in 2019, growing by an estimated 50%. This growth is mainly attributed to increasing market accessibility and growing corporate and institutional adoption.
The report, conducted by the Satis Group, offers an in-depth analysis of the current cryptocurrency landscape, which encompasses exchanges, OTC providers, consumer custody, and institutional custody solutions.
The report importantly notes that the two biggest areas of uncertainty of the market in its current state have been trading (how to best acquire/exchange digital assets), and custody (how to best store the digital assets).
Exchange Trends and Their Impact on Trading Volume
The Satis report explains that as of now, the majority of cryptocurrency trading volume can be attributed to a select few exchange platforms, whose combined trading volume accounts for more than 75% of the overall cryptocurrency trading volume.
As traffic on these exchanges grow, and as volume shifts to the bigger operators due to better infrastructure, Satis expects trading fees on centralized exchanges to increase as well, rising from an estimated $2.1 billion in collected fees in 2018 to well over $3 billion in 2019.
“We estimate this number (collected trading fees) to grow to well over $3B in 2018, aided by: 1) trading support from larger exchanges, 2) increasing institutional participation, and 3) growing retail adoption through developing inlets such as mobile apps, with fees slightly outpacing volume growth driven by higher fee regions like the U.S.”
The researchers expect decentralized exchanges to become a popular platform for cryptocurrency investors, noting that the increased control the exchanges offer investors will likely lead to a greater amount of trading volume on DEX in the coming years.
The report also explains that as their features and usability becomes more competitive with centralized exchanges, more volume will shift to these options.
“Although DEX volume remains a small fraction of overall crypto market volume, over the next 5-10 years we expect decentralized exchanges to become increasingly competitive with centralized exchanges as user interfaces/experience improve and liquidity increases.”
As Crypto Trading Volume Grows, It Will Likely Overtake that of US Corporate Debt
Arguably one of the most important predictions made by Satis is the future increase in cryptocurrency trading volume, and the prediction that it will overtake that of US Corporate Debt trading by the end of 2018, followed by 50%+ growth in 2019, with an overall Compound Annual Growth Rate of 9% through 2028.
Bitcoin and Tether (USDT) are key components of this trading volume, with Bitcoin accounting for approximately 33% of global trading volume, and USDT accounting for 22%, followed by Ethereum (ETH) with 12%.
Based on Satis’ projected growth, cryptocurrency trading volume is on track to account for about 10% of US Equity volume.
These figures and predictions mean that although cryptocurrencies are stuck in a persisting bear market, their prices will likely climb and stabilize as trading volume increases as a result of better investment venues, better custodial solutions, and increased institutional and corporate interest.
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