Cold Wallet Storage Emerges As A New Way To Measure Crypto Exchange Dominance
  • Coinbase has witnessed steady growth and dominance primarily because it entices the large share of long-term/institutional investors.
  • Huobi turns out to be a compelling case in this. It saw a jump from fifth-largest to the second-largest cryptocurrency exchange throughout 2019.

It isn’t effortless to find reliable data on crypto exchanges. As per a report from Bitwise last year, they had expressed their doubts on the reported trading volumes from exchanges themselves.

Responding to this allegation, many exchange ranking sites, as well as for analytics firms, came up with metrics for assessing crypto exchanges along with exchange volume.

But, these metrics come with their drawbacks. It has seen, that many times, they do not take in the major exchanges, and also might be based on easy-to-fake metrics like unique web visitors or app store rankings. Along with it, they often deliver very little transparency.

Coinbase has witnessed steady growth and dominance primarily because it entices the large share of long-term/institutional investors. They are less concerned with short term price swings.

Huobi turns out to be a compelling case in this. It saw a jump from fifth-largest to the second-largest cryptocurrency exchange throughout 2019. Along with it, it has also alleged that the bulk of PlusToken transactions had processed through Huobi.

Briefly speaking, as per the cold wallet holdings, Coinbase remains the undisputed king of crypto exchange. Other exchanges like Binance, Bitfinex, Bittrex, Bitstamp, etc. have also seen a relatively little change in their holdings in 2019. On the other hand, Huobi, Bitflyer, OKEx, and Gate.io all witnessed substantial increases.

On researching, two reasons come out as to why the financial returns for these tokens over 2019 correlate with the exchanges’ cold wallet holding.

Firstly, if more user deposits to exchange, then more users would be trading on that exchange. As a result, more revenue would be generated for that exchange.

Secondly, a sizeable cold wallet holding signal indicates a high level of user assurance in case of a hack, fraud, etc. This might point out that users would be more willing to hold the exchange’s token. Binance, Huobi, Gate.io, OKEx and few others give their tokens.

Although the cold wallet storage may not seem like an ideal metric for assessing crypto exchanges, it is a new data which offers hints at exchanges’ user numbers, trading volumes, and revenues. Cold wallet storage also can not be faked.



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