Regulated exchanges dominate Bitcoin trading volumes
The trading volume ratio between KYC and non-KYC exchanges provides interesting insight into the market’s behavior. The ratio illustrates how traders interact with regulated and unregulated platforms and how their activity affects price movement.
The trading volume ratio saw significant fluctuations throughout the year and mostly mirrored Bitcoin’s price performance closely. It steadily increased at the start of the year, indicating an overwhelming preference for KYC-compliant platforms. This spike in early January likely resulted from the highly-anticipated launch of spot Bitcoin ETFs in the US, which pushed Bitcoin’s price to $45,000.
The approval of spot Bitcoin ETFs in the US likely prompted institutional and large-scale traders to engage with the market. These traders are almost exclusively required to use exchanges that comply with anti-money laundering (AML) and Know Your Customer (KYC) regulations, which is why they saw a sharp spike along with ETF activity.
Graph showing the trading volume ratio between KYC and non-KYC exchanges from Jan. 1 to Dec. 11, 2024 (Source: CryptoQuant)
Halfway through the year, the ratio began showing more volatility, with significant declines during periods of price corrections. Despite being short-lived, these declines suggest that non-KYC exchanges retained their relevance for a certain portion of the market.
The ratio climbed again in the third quarter as the market prepared for significant volatility after the US Presidential elections. This uptick shows that KYC exchanges play a central role in the market during rallies. The ratio peaked as Bitcoin broke its all-time high of $100,000.
The relationship between the trading volume ratio and Bitcoin’s price shows that KYC exchanges dominate trading volumes. This enables them to serve as a barometer for the broader market sentiment — a rising ratio typically indicates growing engagement and confidence in the market, while a falling ratio shows a temporary retreat.
This duality reveals the bifurcation within the crypto market, where regulated platforms cater to professional and compliant traders, and unregulated platforms attract retail participants seeking alternative trading environments.
Graph showing the trading volume ratio between KYC and non-KYC exchanges from Oct. 1 to Dec. 11, 2024 (Source: CryptoQuant)
Raw trading volume data for KYC and non-KYC exchanges further reinforces the former’s dominance. Regulated exchanges have consistently had significantly higher trading volumes compared to non-regulated platforms.
This disparity becomes even more pronounced during periods of strong price movements, such as the rally toward $100,000 in December. The high activity on regulated platforms shows they’re the primary liquidity providers in the market, especially during periods of high volatility.
Graph showing the raw trading volume for KYC and non-KYC exchanges from Oct. 1 to Dec. 11, 2024 (Source: CryptoQuant)
In contrast, non-KYC trading volumes remain relatively stable, with only modest increases during major price rallies. This stability suggests that non-KYC platforms primarily serve a smaller, retail-centric user base that is less reactive to macro-level price movements.
Non-KYC exchanges primarily cater to retail traders who are often less sensitive to short-term price volatility. These users typically engage in smaller trades and are more focused on long-term holdings, remittances, or privacy-oriented transactions.
Many users choose non-KYC exchanges for their anonymity and ease of access. These traders may operate in regions with limited financial infrastructure or strict regulations and tend to use these platforms for specific purposes, such as on-ramping, off-ramping, or peer-to-peer transfers. Their activity is less driven by speculative trading, which is more common during price rallies.
Furthermore, non-KYC exchanges generally have lower liquidity and less advanced trading infrastructure than their KYC counterparts, limiting their attractiveness to high-frequency traders and large-volume participants, who are most active during periods of high price volatility.
While non-KYC platforms offer accessibility and, in some cases, anonymity, their influence on the market is very limited. The low volume relative to KYC exchanges reflects the gradual marginalization of non-compliant platforms as regulatory scrutiny increases and the crypto market continues to mature.
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