U.S. centralized crypto exchanges (CEXs) are finding themselves in a tight spot, wrestling with decreasing crypto liquidity as regulatory antagonism impacts major players such as Binance.US and Coinbase.
However, amidst this gloomy situation, a ray of light emerges. According to a report prepared by digital asset data provider Kaiko, Kraken, the second-largest crypto exchange in the U.S., has been the only trading platform to see an increase in market depth year-to-date (YTD).
Kraken Outpaces Its Competitors
Market depth can be defined as an exchange’s ability to absorb relatively large market orders without significantly affecting the asset’s price. Simply put, it can also be considered a measure of available liquidity on the platform. As seen in the graph below, Kraken outperformed its competitors in the U.S. market.
This can also be measured by comparing the supply of Bitcoin (BTC) on different U.S.-based exchanges. While BTC on Coinbase saw a sharp drop in May and plateaued in June, the balance on Kraken was on the rise. This indicates that investors preferred Kraken following the legal action on Coinbase.
Increase in Trading Volume
Even in the European market, Kraken managed to increase its trading volume market share from 33% at the beginning of the year to 54% at the time of writing this article. According to Kaiko, a significant portion of Kraken’s market share came from the presence of Binance and Coinbase.
What seemed to favor Kraken was relatively less regulatory pressure. Unlike Coinbase and Binance.US, Kraken avoided the wrath of U.S. authorities as no serious legal action was taken against the exchange in the second quarter of 2023.
However, it should be noted that Kraken had to suspend its Ethereum (ETH) staking program in February following an accusation by the SEC.
The effect was also seen in overall spot volumes. On June 22, according to CoinGecko, Kraken’s daily volume hit a three-month high as investors started transferring BTC in droves to take advantage of the latest market rally.
In the past 24 hours, Kraken conducted transactions worth over $492 million, making it the third-largest crypto exchange in the world in terms of trading volume.
Disclaimer: The information contained in this article is not investment advice. Investors should be aware of the high volatility of cryptocurrencies and conduct their transactions based on their research.
