August 12, 2020
Cryptocurrency products trading surpassed $2 trillion in Q2 of 2020 alone – a 2.6% increase from the prior quarter, and a 165% increase from the previous year. According to TokenInsight, new business strategies by emerging exchanges such as Bingbon, XBG, HBTC and Phemex could push that figure even more significant in the latter part of the year 2020.
Room to Grow Made Way For Emerging Exchanges
Derivatives trading still sums to around 27% of the volume observed on traditional spot trading markets. But, spot trading volume saw an 18% decrease from the previous quarter, and a 25% drop from the same period in 2019, while the derivatives market remains to swell.
The more significant part of the derivatives trading presently takes place on the “big five” cryptocurrency exchanges. Huobi showed to be the most popular spot for derivatives, recording $433.4B volume in Q2 alone. Succeeding behind was Binance at $336.1B, OKEx at $243.2B, BitMex with $203.4B, and Bybit with $105B.
Though market giants carry on dominating, for the time being, emerging exchanges are creating their place at the table by adopting exceptional business strategies. One of them is Bingbon, which logged over $30B worth of derivatives trading volume in Q2. This can be credited to Bingbon’s compliant operation of Circle’s USDC stablecoin in the Southeast Asian market, and the introduction of the exchange’s Copy Trading article.
Copy Trading allows new traders to compete with more successful traders by reflecting the trades they make. Bingbon users can peruse the site’s most steadily successful traders, arranging them by profitability percentage, trading style and win rate. Social trading features such as these may become more common in the future, as exchanges try to ease the onboarding process for new users.
Rise of Competition
Some emerging exchanges have applied business strategies planned to make themselves outstanding from the competition. ZBG exchange’s attention on user education saw the site’s visitor numbers hit 2.5 million, while the average time spent by each user on the website is around 15 minutes. ZBG noted over $30 billion worth of derivatives volume in Q2, signifying its plan to “upskill” its users may be showing results.
Similarly, HBTC exchange pursues to distinguish itself by buying back units of its HBC coin from consumers of its platform. This gives HBTC users a share in the exchange’s profits efficiently. In comparison, Phemex exchange is the first to introduce membership-based spot trading. Their members are not obliged to pay transaction fees. This is assumed to be a ploy to draw large-value traders who would profit the most from the suppression of typical trading fees.
The unique distinguishing factors are helping to uplift these emerging exchanges amongst a very competitive marketplace. Also, the lack of consistency across such transactions suggests more increased competition will take place in the short run. According to TokenInsight; When all exchanges eventually offer the same tray of features, the “competitive landscape will be broken again.”