A recent study has found that approximately 70% to 80% of transactions in the secondary market of cryptocurrencies involve crypto assets and stablecoins. This indicates a strong preference for using stablecoins as a medium of exchange within the crypto market. One of the factors contributing to this trend is the welcoming stance of the South Korean government towards cryptocurrencies, coupled with the high popularity of crypto assets in the country. As a result, the South Korean won has become the second most commonly used fiat currency in the crypto market.
However, the study also highlights that during periods of rapid growth, transactions between cryptocurrencies and stablecoins often give way to crypto-to-crypto transactions. This shift was observed in 2020 and 2021, as well as in the second half of 2023. Additionally, the report suggests that an increase in transactions involving fiat currencies may be a sign of either increased appetite for cashing out or flight-to-safety behavior.
Interestingly, despite the announcement of the Markets in Crypto Assets Regulation (MiCA) in the European Union, the euro’s role in crypto transactions remains relatively insignificant. The report speculates that once MiCA is implemented in 2024, it could potentially drive growth in euro volumes and enhance investor protection.
Furthermore, the study points out that centralized exchanges dominate the market, with the top 10 exchanges accounting for approximately 90% of the total trading volume. Binance, in particular, holds a significant market share with a trading volume of USD 3.7 trillion, representing 49% of the market. However, Binance’s trading volumes have been declining since 2022.
Overall, this study provides insights into the dynamics of the crypto secondary market, highlighting the prominence of stablecoins and the influence of government regulations and market trends on transaction volumes.