Crypto exchanges are set to rake in twice as much money as last year even though bitcoin is down 67%
Compared to 2017, bitcoin has slumped by a large margin. Many long-term holders pulled out after the price dropped, and people have been down in the dumps about the price.
But they’re not the only people in this market. Crypto exchanges have been thriving through the storm, despite bitcoin’s price dropping by a whopping 67%. In fact, a recent report found that crypto exchanges could make up to twice as much money as last year.
According to a report by Sanford C. Bernstein & Co. , in 2018, the #income of #cryptocurrency #exchanges can GROW 📈👀 by MORE than TWICE👀 – up to 4 BILLION dollars!!! 👀 #crypto 🚀🌕 $btc $EXRN $ltc $XRP $trx $cnn #Bitcoin #blockchain #fintech pic.twitter.com/PpCjCZQslM
— TRX Dino (@TRX_Dinosaur) August 21, 2018
In total, the digital currency market has shed over $500 billion since it topped $800 billion in January.
A notable number of crypto exchanges experienced a number of outages and hacks as the price of bitcoin took off, hitting a peak of $20,000 at the end of 2017. Nonetheless, exchanges earn their money by facilitating the matchmaking of buyers and sellers. This means that regardless of the market environment, crypto exchanges are able to see profits.
Sanford C. Bernstein & Co. analysts report that the revenue generated from crypto exchanges could double to as much as 4 billion; despite the dive digital assets took in value this year.
The buying and selling of cryptocurrencies generated $1.8 billion in transaction fees in some of the largest crypto exchanges last year. These estimates are solely based on transaction fees. In terms of segments, the Global Cash Equities business was the only one able to surpass cryptocurrency trading. He followed this statement, saying;
“As the crypto-asset class seasons and institutional demand builds, there are a plethora of opportunities for traditional firms,”
The cryptocurrency industry is highly volatile, and for some people, taking risks is not an option. Even though wall street giants such as Goldman Sachs Group Inc. and JPMorgan Chase & Co. have dabbled in the crypto industry, the traditional finance industry have a tendency to tread carefully with anything regarding it. As government scrutiny toward cryptocurrency grew at the end of 2017, the price dropped around 67%. This prompted the financial industry to proceed cautiously amid the regulatory uncertainty and volatile prices.
Because of the caution surrounding the industry, Coinbase Inc – a U.S. based crypto exchange, with backing from traditional banks, venture capital, and exchanges — are liable to end up in an “unassailable competitive position”. But if Wallstreet were to engage with the cryptocurrency industry more, this could be averted.
Coinbase is estimated to own a nice slice of about 50% of the transaction revenue pool. Even still, traditional fiat finance is unlikely to welcome crypto spot trading with open arms as of yet. This is mainly due to regulatory concerns and money laundering risks presented by the anonymity of the cryptocurrency industry.
Crypto exchanges are able to get an extra boost in revenue if they’re able to attract larger investors to their trading platforms with white-glove services. Offering these services to large institutions will help to make the market mature. Kiran Nagaraj, KPMG’s leader of cryptocurrency services says
larger investors need to be supported on crypto-specific issues such as managing crypto forks — when a crypto splits into two — for them to enter the market in a serious way. Big investors don’t want to be concerned with the technicalities.
“They’re in the investment business,” he said. “They can’t hold their own private key. Maybe you’ll find some that’ll do it, but they are looking for market exposure. They don’t want to deal with the operations.”