A summarizing review of what has been happening at the crypto markets. A look at trending sectors, liquidity, volatility, spreads and more. The weekly report in cooperation with market data provider Kaiko.
Bitcoin ended the week higher despite market jitters from President-elect Trump's tariff threats on China, Canada, and Mexico. Meanwhile, Tether announced it will discontinue its EUR-backed stablecoin (EURT) due to regulatory challenges, while a U.S. court overturned sanctions on the cryptocurrency mixer Tornado Cash. This week, we explore:
- The shifting crypto exchanges landscape
- XRP volatility soars
- Growing demand for stablecoin liquidity
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Shifting exchange landscape
The crypto market has evolved significantly since the 2020–21 bull run, with stricter regulations and shifting user preferences reshaping the exchange landscape. While Binance remains the market leader, its dominance has waned due to regulatory challenges in multiple jurisdictions, creating opportunities for smaller exchanges to establish a foothold and expand their market share.
In the past three months, the ongoing market rally has primarily benefited Coinbase and Upbit, which have posted the strongest gains in market share. This divergence is particularly notable due to their distinct user bases: Coinbase derives more than 80% of its trading volume from institutional traders, while Upbit caters to risk-seeking retail investors.
The data suggests that while altcoins have thrived in November amid improving risk sentiment and hopes for regulatory clarity in the U.S., Bitcoin remains a key driver of the rally. Notably, exchanges like Bybit, OKX, and Bitget, which saw strong growth earlier this year, experienced market share declines since August. Binance’s market share fluctuated between 35% in August and 48% in September, remaining below 50%.
Despite this, Binance continues to dominate key metrics, averaging $19 billion in daily trading volume in 2024—nearly five times Bybit’s $4 billion. It also leads in trading pairs, offering over 1,200 compared to fewer than 800 on most platforms.
While some exchanges might be experiencing some market share declines now, regulatory shifts in major markets could change that. One notable area that could benefit these platforms is the potential resurgence of exchange tokens. These tokens often give holders access to improved trading fees and were very popular during the previous bull run. However, since the collapse of FTX and its FT token they have seen sparse trading and price action. That all changed this month as volumes soared—led by Crypto.com and BitGet.
Crypto.com's CRO clocked up nearly $4bn in trade volume in November, more than three times the activity it had during the March rally and the highest since March 2022. What's behind the resurgence in these tokens? It's likely tied to two main drivers, trading fee promotions and regulatory shifts in the US—the latter could be a major driver for exchange competition in 2025.
Users on Crypto.com benefit from low fees versus platforms such as Coinbase. If you're a CRO holder and a Crypto.com user you can even trade for free, depending on how much of the token you own and agree to lock up on the exchange. In the image below we map the fees charged for standard users versus those for users with 50k CRO ($8.8k) locked on the exchange. As we can see, the promotion reduces maker fees to zero and taker fees on each tier drop too.
As well as trading fee promotions changes at the US Securities and Exchange Commission will likely benefit these tokens. Chair Gary Gensler will leave the commission on January 20 alongside Jaime Lizárraga. This changing of the guard at the regulator is widely expected to benefit crypto exchanges, who have had to contend with an environment of regulation by enforcement over the past few years.
Shifting volatility trend benefits XRP
Realized volatility for most major crypto assets has been trending lower over the past few years, however, early signs suggests regulatory shifts could spark renewed fluctuations.
BTC's 60-day realized vol has fallen steadily over the past decade, reaching multi-year lows ahead of the US general election. Altcoins experienced similar trends, with ETH and SOL both down considerable from yearly highs heading into November. However, since the election and President Donald Trump's victory this has begun to change. XRP in particular has seen a stark uptick in volatility, with realized vol up over 100% for the first time since July 2023.
It's not just volatility thats up as XRP soars above $2 for the first time in nearly seven years. The move higher was matched by increased trading volumes and XRP even eclipsed BTC volumes over the weekend. Seeng stronger volumes accompany a move higher in prices implies that the move has a broad base and is less likely to be just a fleeting change.
The sharp uptick in XRP volatility and volume comes as the token's price soars amid renewed positive sentiment for the assets in the US. This follows last years spike in volatility and volume following the favourable ruling in its case with the SEC.
Similar to exchange tokens this trend suggests that other tokens in the regulators crosshairs might benefit from the regime change at the SEC. With a more open regulator tokens that had been branded as securities and projects weighed down by judicial burdens will now benefit from more favourable sentiment. Early signs of this are visible in the spot market structure for XRP as Coinbase now commands nearly 9% of the total spot market. Coinbase only re-listed the asset in July 2023 after the initial ruling in its legal case with the SEC.
Demand for stablecoin liquidity increases
The recent cryptocurrency rally has triggered an increase in both off-chain and on-chain demand for stablecoin liquidity. The cost of borrowing USDT and USDC from Binance's margin trading platform has more than doubled since late October. While these rates often fluctuate based on market conditions and supply-demand dynamics, the increase suggests higher demand for leveraging positions in both spot and futures markets. This has been matched by a surge in stablecoin market cap which hit a record high recently.
Stablecoin borrowing rates on Aave V3 have also risen in November. Aave's interest rate model is directly tied to the utilization rate, calculated as Total Borrowed / Total Liquidity. The utilization rate indicates the percentage of deposited tokens being borrowed; when the "optimal" percentage is exceeded, rates increase rapidly to encourage repayments or deposits, thereby lowering the utilization rate.
USDT-USD Cumulative Volume Delta (CVD) over recent months shows significantly increased net buying since November, suggesting traders are rotating from fiat into stablecoins. USDT dominance relative to other USD-backed stablecoins (not charted) surged from 69% in early November to a 13-month high of 86% on November 26, before retreating to 80% last week. Interestingly, while demand for USDT appears to be rising, Hong Kong-based First Digital's FDUSD has experienced net selling against USDT since the August 5 selloff.
Back in April, Binance adjusted its large-scale zero maker and taker fees for FDUSD, reintroducing standard taker fees for FDUSD trading pairs for its regular and VIP-1 users. Recently, Binance introduced BFUSD, a yield-bearing asset similar to Ethena's USDe, offering yield derived from delta hedging and staking strategies. This token will not be traded on the open market and can only be used as margin for futures trading.
EUR-backed stablecoins volume hit a yearly high
EUR-backed stablecoins trade volumes have surged tenfold over the past month from $5mn daily in October to a yearly high of more than $70mn in early November before retreating slightly last week. Volumes remained above $20mn/daily for the longest period since 2022 suggesting robust demand.
The increase was driven by Eurite (EURI) stablecoin and Circle’s EURC which made more than 90% of the total trade volume in November. While EURC remains the market leader, with about 50% market share, EURI– a MiCA compliant stablecoin - has gained traction following its listing on Binance at the end of August.
The EUR stablecoin market has seen significant shifts after the entry into force of MiCA at the end of June. Last week Tether announced it will discontinue its EUR-backed stablecoin EURT due to regulatory reasons. Once the market leader with a market share of 60% in early 2021, EURT trade volumes have dropped tenfold since to $1.6mn this year.
