Identifying Potential Frontrunners in the Evolving Crypto Exchange Market

The exchange landscape is shifting as the digital asset markets look primed to move into a new, more bullish phase in 2024. Market share is falling away from those that led the last cycle highs, leaving the field open for rivals to move in.

But how will the reshuffle play out? Will crypto-native operators like Kraken continue to prevail over the segment, or is it more likely that compliance-centric TradFi expansionists like MultiBank can snap up market share?

Timing and price targets may be a point of debate, but many analysts now agree that 2024 will represent a turning point in crypto’s notorious market cycles. Bitcoin’s upcoming halving event in April 2024 seems likely to occur alongside a demand squeeze created by the rush to list spot Bitcoin ETFs, should the SEC issue a long-awaited first approval – an outcome that still seems highly probable.  Both events happening within weeks of one another make for an optimistic BTC price forecast over the following months.

A Shifting Crypto Exchange Landscape

Historically, cryptocurrency exchanges have been among the biggest beneficiaries of a crypto bull market. However, many of the market leaders of the last bull run are now either defunct or struggling to hold onto their previous market share. The downfall of FTX has been so spectacular that even if the exchange were to make a comeback, it’s not going to be on the scale it was operating at when it crashed in November 2022.

For several months following the FTX collapse, Binance appeared to be the biggest beneficiary of its demise. However, following Binance’s own well-documented legal troubles, culminating in a $4.3 billion settlement with the Department of Justice in November, the firm is now losing market share at a rate it will be difficult to recover from. In the hours following the news, over $1 billion reportedly flowed out of the exchange as customers rushed to withdraw funds. However, even before that, the company’s spot market share, a segment over which it had historically dominated, had reduced by one-third compared to the previous year.

Coinbase, Binance’s biggest rival for dominance in the US markets, has also seen its reputation and share price dented by legal action this year. Following news of the SEC’s lawsuit against the firm for the sale of unregistered securities in June, the firm reported third-quarter trading volumes that were down by more than half compared to the previous year. Investor confidence was reflected in the share price, which also fell 4% on the news.

Markets in Search of New Leaders

Some of the market share lost to the previous leaders was initially redistributed to competitors like Kraken and Bitstamp. However, Kraken has since run into compliance problems of its own.

Bitstamp has been better at keeping its compliance and PR house in order and has reaped the rewards with a recent stablecoin collaboration with Societe Generale. However, it’s currently carving a relatively lonely path among its previous rivals. Meanwhile, institutional interest is on the up, meaning that there’s market share for the taking.

Even so, it won’t be the case for long, as seasoned TradFi operators recognize the opportunity. MultiBank Group is one such example, with a rich history in finance that offers compelling social proof for institutional traders and investors. Established in 2005, the firm has worked diligently to bring regulation and safety to the derivatives trading environment. In return, it’s accumulated trading volumes in excess of $12 billion per day based on compliant operations in 25 countries with over 14 financial licenses to operate, including the Dubai Virtual Assets Regulatory Authority.

Furthermore, MultiBank enables traders and investors to consolidate their activities into one trading venue, organizing their portfolios across a range of assets, including gold, stocks, forex, and indices. This range now also includes crypto spot, futures, and NFT markets. With an understanding of the more hands-on touch required for professional investors, MultiBank.io seems poised to capture a share of the growing digital asset market.

Institutional Players Move In 

MultiBank isn’t the only one to have spotted the opportunity. The last year has seen a slew of names, both new and familiar, forge a path into the crypto sector, no doubt with an eye on the next growth phase. In September, Deutsche Bank announced it was partnering with Swiss crypto custodian Taurus to provide digital asset services to its institutional clients. In December, DWS, an asset management firm owned by Deutsche Bank, announced it was planning to offer a euro-denominated stablecoin in collaboration with Dutch market maker Flow Traders and asset firm Galaxy Digital.

Rulematch, a newly established Swiss crypto exchange for banks, also launched in December, announcing that it has onboarded several clients, including the Swiss arm of Spanish bank BBVA. Like MultiBank, Rulematch also takes a ruthless approach to compliance, using custody tech from Switzerland’s Metaco and compliance elements of Nasdaq’s trading system.

With so many new entrants coming into the segment along with potentially unprecedented growth fostered by institutional takeup of digital assets, the exchange sector is set for a huge shakeup. Since we know that the winner of the next bull market isn’t likely to be one of the previous incumbents, any new or existing entrants have an opportunity for the taking.