Standard Kepler

Exchanges Diversify in Face of Heated Competition

Exchanges (Huobi, Binance) Diversify in Face of Heated Competition
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06/04 – 06/10

WEEKLY RECAP

  • Total market cap. reached $324.22 bn (a 6.6% decrease), where 7 day trading volume slumped by 9.4% for top 100 crypto


WEEK AHEAD

  • 14 June: BTC to serve as payment for accommodation during World Cup
  • 15 June: VEN to launch Alpha Test Applications


THOUGHTS OF THE WEEK

Investors’ attention turned towards crypto exchange tokens this week. In particular, Binance stood out with its investment in chiliZ (a blockchain-based E-sports platform), the reveal of their $1bn crypto asset based Binance Fund, and their official bank account opening in Malta.

As noted in our Chart of the Week, the price of Binance Coin (BNB) surged to a monthly high of BTC 0.002287 on 6 June. The forming of the Binance Fund promises to greatly enhance the utility of BNB tokens, as BNB can be used to invest into the fund. Expected future demand to invest into this large fund is likely a key driver behind BNB’s strong performance this week, and this future demand may become a key long-term demand driver for BNB.

We anticipate that the competition among crypto exchanges will further intensify in the future. Huobi, as Binance’s main rival, recently partnered with HBUS in the US, launched their HB 10 Crypto Index, and Huobi Chain project. This push for diversification by crypto exchanges comes as Ella Zhang, Head of Binance Labs, stated on 4 June that a bursting ICO bubble would be a “good thing for the industry”, and that current valuations are “high and unreasonable”, putting into focus the questionable sustainability of the token listing business model for exchanges.

Furthermore, “new” crypto asset financial service providers face further competition from traditional investment giants such as Fidelity Investments, who plan to build their own digital asset funds and exchanges. With an established client base and ample expertise in fund management, planned funds such as Fidelity’s may present a major  threat to existing crypto asset funds, as investors new to crypto assets are likely to make funds supported by traditional investment giants their first port of call.

 

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