A recent report suggests that total cryptocurrency trading volume this year is likely to overtake U.S. corporate debt. Research specialists Satis Group published a report on September 18 that predicts total cryptocurrency volume for 2018 will reach $7.3 trillion. If it reaches this figure, crypto volume will surpass the current level of U.S. corporate debt which currently stands at $7.05 trillion.
It’s been a difficult year for cryptocurrency, with the market being decidedly bearish since January. However, if Satis is right in its projections, this higher trading volume is a positive indicator for crypto as it suggests growth in the sector.
Whilst this is encouraging, there’s no doubt that crypto is a nascent market. This volume level is a drop in the ocean when compared with that of U.S. Equities ($74 trillion) and U.S. Treasuries ($121 trillion). The cryptocurrency market needs more time to develop further before there can be any expectation of it reaching comparable volumes. With that in mind, it’s significant that they also project further growth in volume for 2019 – suggesting that there will be a 50% gain in overall trading volume next year.
Crypto Exchange Revenue Growth
Satis’s research also examines centralized cryptocurrency exchanges. One insightful takeaway from the report is that 75% of all market trading volume is accounted for by the top 20 cryptocurrency exchanges. As a consequence, liquidity remains concentrated amongst a fraction of the exchanges. Despite this, with signs of the market maturing, more exchanges are opening in many jurisdictions. Furthermore, Satis predict a 50% increase in exchange trading fees in 2018 which they forecast at $3 billion based in part upon their estimation of fees in 2017 at $2.1 billion.
They acknowledge the emergence of decentralized exchanges – which operate in a trustless manner, facilitating trades between buyers and sellers by way of smart contracts. However, the conclusion reached is that they have not yet developed such that ease of use, liquidity, confirmation times and community adoption are optimal. As these aspects are improved upon, the expectation is that decentralized exchanges are likely to provide a competitive threat to centralized cryptocurrency exchanges.
Predicted Crypto Winners & Losers
The Satis report is their fifth in a series that examines cryptocurrencies and crypto asset classes. Previous reports have led to some newsworthy predictions.
In a report issued on August 30, they forecast a Bitcoin (BTC) unit price of $96,000 in 5 years. They were extremely critical of centralized cryptocurrency, Ripple (XRP), on the basis of both for its centralized nature and also in terms of ownership/validation. Satis suggested that there was little value in it given that it’s one of a number of crypto assets that is misleadingly marketed. On the back of this rationale, Satis foresees a future Ripple/XRP unit price of $0.01 by 2023. This is all the more interesting given the recent surge in Ripple following indications that they are about to launch their xRapid based service offering.
Bitcoin Cash (BCH) is another that Satis is critical of on the basis that it has attempted to inherit brand recognition (by forking away from Bitcoin in 2017 and retaining the Bitcoin name) whilst providing minimal technological advantage compared with the original Bitcoin.
Satis maintains that the greatest growth opportunity within crypto-assets is in a store of value use case. Whilst there’s no doubt this feeds into their price prediction for Bitcoin (BTC), they also cite privacy coin Monero (XMR) – proposing a potential unit price of an astonishing $18,498 in 5 years time.
Satis identifies a significant subset within the store of value market – offshore funds – which they believe will be relevant in terms of growth. This is likely to provide the rationale for their belief in Monero going forward.