Centralized Exchanges Report 2023: Insights and Detailed Analysis of Crypto Exchange

On Dec 29, 2023

Behind the staggering $114 million Poloniex hack and the volatile nature of Centralized Exchanges, our report delves into the intricate behaviors of the crypto market.

From institutional players scrutinizing the implications of regulatory decisions to unpacking the security challenges that have arisen, centralized exchanges play a pivotal role in each scene.

We offer a clear-eyed synthesis of 2023’s critical moments against the backdrop of global economic forces through a meticulous examination of market data and industry events.

So, without any further ado, let’s dive deep into our annual report for 2023 to understand the trend of the crypto-centralized exchange industry.

Combined Quarterly Spot and Derivatives volumes eye the final quarter to close above the $8Trillion mark.

2023’s been a breakout year for crypto exchanges. After a rocky ride in 2022, trading volumes started growing again and hit the $10 trillion mark in January 2023. It’s like the market hit the refresh button, and traders came back strong. However, the market has been pushing the volumes down for two quarters, showing a pullback phase, a FUD era.

However, the third quarter marks the end of pullback as the numbers start climbing up in the final quarter close to the $8Trillion mark. It’s been a full sprint, with the market showing it has the legs to go the distance. As we race towards year-end, the volumes and the overall market are growing, including Bitcoin and altcoins.

Amongst centralized exchanges, 2023 has been a tale of shifting sands. Binance started the year with a commanding lead, but the charts told us a story of intense rivalry and changing fortunes as the months rolled on. Each bar in the graph is a battlefield where market shares were won and lost, with colors stacking up like contenders in a tightly contested race.

In short, it’s been a tough year for Binance. Once boasting more than 50% market grip, its lead has slipped. The reason? Trading volumes have taken a hit, nosediving after some hefty legal blows. The gavel came down hard with a record $4.3 billion fine from the U.S. Department of Justice.

By the end of the year, the landscape had transformed, with newcomers like Bybit and Bitget making their presence felt.

Binance dominates half of the crypto derivatives market with 50% trading volume

Binance has been the undisputed champ, clinching just over half the market share at 50.9%. While they’ve maintained a steady lead, the gap is narrowing, with Binance’s slice of the pie edging down to 45%. This shift signals a market heating up as critical players ramp up their game.

OKX, in particular, is steadily climbing, boosting its stake from 10% to 15.5% within a year, showing they’re a force to be reckoned with. Bybit, Bitget, and MEXC Global are not just onlookers but are actively chipping away at the lead, carving out their own significant spaces in the market. Together, these contenders hold a formidable 42.3% of the derivatives trade, showcasing fierce competition.

Amongst centralized exchanges (CEX), the battle for user deposits is telling. The pie chart below for 2023 lays it open. Binance and Coinbase are the Goliaths, commanding the lion’s share of over 60%. Binance edges out with a 32.7% slice, while Coinbase follows closely at 29.4%. These heavy hitters aren’t just leading; they’re defining the space.

But it’s more than a two-horse race. The rest of the field is a mosaic of ambition and growth. OKX isn’t far behind, claiming a notable 8.5%, while Kucoin secures a 7.1% cut. Though more minor, Gate.io, Huobi, and the others add vibrant competition splashes to the mix.

Diving into the data on active deposit addresses across centralized exchanges, we paint a picture of a bustling marketplace with Coinbase and Binance at the forefront. The first chart demonstrates that while Coinbase boasts a significant count of deposit addresses, the number of active addresses trails, hinting at a legacy user base with dormant accounts.

In contrast, Binance and OKX exhibit a vibrant activity scene with comparable active addresses, suggesting these platforms maintain a dynamic user base. This activity could mirror user confidence and these exchanges’ continuous, engaging nature.

Switching gears to the inflow of new deposit addresses, we observe a telling trend. Binance and Coinbase, despite their size and influence, show a downtrend in attracting new wallets. This pattern may illuminate the challenges even market giants face in a saturated industry.

OKX, on the flip side, bucks the trend with a marked uptick in new deposit addresses from the dawn of 2023. A feature allowing multiple addresses per account could fuel this growth, indicating OKX’s strategic edge in enhancing user experience and convenience.

Poloniex took the biggest hit in November with a whopping $114 million heist.

The bar chart of recent hacks shows all the breaches, with Poloniex taking the biggest hit in November with a whopping $114 million heist. That number is enough to make the crypto community shiver.

CoinEX wasn’t spared either, with its defenses breached to $70 million in September. These numbers aren’t just statistics; they’re wake-up calls to the industry, signifying the relentless threat that cyber bandits pose to digital treasure troves.

Smaller exchanges like HTX, Bitrue, GDAC, and Remitano have also felt the sting of cyber-attacks, with losses ranging from a few million to $30 million. Each hack is a stark reminder that security is not just a feature but the very foundation of the fast-paced world of crypto.

These incidents have forged a year where every new hack has been a lesson, a prompt for the industry to bolster its ramparts. It’s a narrative of resilience and a challenge to the crypto world to rise above and fortify its defenses, ensuring that users’ trust and digital assets are shielded with the might of cutting-edge security measures.

In 2023, the message is clear: vigilance is non-negotiable, and security is the king in the realm of centralized exchanges