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According to Coalition Greenwich, the current turmoil in the cryptocurrency market will force more specialized firms to exercise stronger governance and risk management, while financial institutions will work with credible firms with a track record of prudent governance. I am looking for more and more.
The consultant said in its report:Market structure trends to watch in 2023, cryptocurrencies are in the midst of the dotcom era and the washout will result in fewer vertically integrated companies. A more professional company with stronger governance and risk management in a flight to quality.
“These will be overseen by stricter regulations that will drive the entire market segment forward,” Coalition Greenwich said.
2022 was a year of both transition and preparation. Preparing for market structural changes against the backdrop of the March 2020 liquidity crunch and memetic stock boom https://t.co/SOV5FeBLQS
— Coalition Greenwich (a division of CRISIL) (@CoalitionGrnwch) January 3, 2023
In addition, institutional investors will increasingly look to brands and institutions with a proven track record of careful governance and customer centricity.
“And these changes are likely to lead to an increase in institutional allocations to cryptocurrencies, and perhaps even spot Bitcoin ETFs,” the report added.
Colleen Sullivan and Peter Johnson, venture co-heads of Brevan Howard Digital, said in a blog post that, in their personal opinion, cryptocurrencies have never been more exciting.
“We have seen multiple crypto market cycles and know that builder-building hype will subside, non-speculative use cases will accelerate, and big investments will be made,” said Brevan. Howard Digital added. It is also time for the industry to refocus on how fundamental web3 innovations of digital ownership and open network value transfer can positively impact the world. ”
custody
Brevan Howard Digital predicted that custody and settlement will begin to separate from centralized exchanges. A cryptocurrency exchange can have a vertically integrated structure that operates brokerage firms, custodians, and clearing/settlement providers. But the alleged fraud and failure of exchange FTX will eventually change this paradigm.
This custody/trading model has long been desired by traders and has only gained limited traction, but has never been widely adopted due to exchange backlash.The FTX debacle has changed this. increase.
good for custodians @PolySignInc @bit go @mikebelshe @FIREBLOCK HQ @CopperHQ etc
— Peter Johnson (@TheChicagoVC) January 4, 2023
The Coalition Greenwich said in a report last year that fully regulated custody of digital assets is important or very important to the majority of sell-side and buy-side investors. Research, Digital Asset Service Delivery: An Institutional Infrastructure Roadmapfound that 71% of the sell-side and 62% of the buy-side believe fully regulated custody is important/very important.
transaction
Brevan Howard Digital also said that the bankruptcy of FTX and the collapse of other centralized/custodial platforms would lead to overdue changes in the cryptocurrency trading market structure. We expect to move from a centralized exchange (CEX) with books and infrastructure to a decentralized cryptocurrency exchange (DEX). In contrast, DEXs act as decentralized applications on the blockchain.
2) @uniswap overtake @coinbase Volume increases as DEX trading market share reaches new ATH.
The failure of FTX and other centralized platforms will facilitate overdue changes in the cryptocurrency trading market structure, such as increased use of non-custodial wallets and non-custodial exchanges.
— Peter Johnson (@TheChicagoVC) January 4, 2023
@uniswap resolutely overtake @coinbase by trading volume. We see this as a major symbolic shift in the industry (though not globally) as the most famous DEX surpasses the most famous centralized exchange in the US. pic.twitter.com/ohVYc1pOPP
— Peter Johnson (@TheChicagoVC) January 4, 2023
CryptoCompare, FCA-accredited benchmark custodian and digital asset data provider, named 2022 review as one of the most impactful years for centralized crypto exchanges since the collapse of Mt Gox in 2014 I said there is.
“Following the fall in FTX, the main takeaway from 2022 is the increasing importance of security and transparency playing in the CEX sector in 2023,” added CryptoCompare. “We hypothesize that exchanges with good transparency policies, for example releasing a clear and audited Proof of Reserve (PoR), will thrive, especially in years when trading volumes are expected to decline.”
According to CEX, overall CEX trading volume far exceeds decentralized trading volume. CryptoCompare despite dropping by 46.2% in 2022.
Source: CryptoCompare
CryptoCompare predicted that 2021 will continue to see low trading volumes compared to the record due to continued contagion from the FTX collapse. consolidation of market share among exchanges; increased regulatory scrutiny;
“Exchanges will have to comply with stricter regulatory requirements, but it will take several years for regulators to adopt a robust enough framework,” said CryptoCompare. “Regulated exchanges could be the long-term winners of the FTX collapse.”
CME Group
Regulated derivatives exchange CME Group reported on Jan. 4 that average daily trading volume of its cryptocurrency contracts increased 82% year-over-year in 2022. Additionally, CME reached his record average daily volume of 19,582 contracts in MicroEther futures.
In its 2022 review, Arcane Research said that CME was fairly stable at 10% to 15% of the crypto derivatives market throughout 2022, but then spiked briefly after FTX collapsed in November. According to the Norwegian research-driven digital asset brokerage, CME accounts for only 4% of the market’s trading volume.
Source: Esoteric Research
“While comparing CME to offshore derivatives is somewhat unfair due to the significantly lower trading days, it is clear that most of the trading activity for Bitcoin derivatives occurs on offshore derivatives exchanges,” says Arcane Research. added. “Nevertheless, this has been the case since the CME launched Bitcoin futures, and despite the relatively low trading volume, the CME remains an influential place in Bitcoin price discovery. have been shown by several price discovery analyzes.”
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