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Bernstein research says crypto exchanges are set to rake in twice as much money as last year

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bitcoinDavid
Ryder / Stringer

  • Cryptocurrency exchanges are making money
    hand-over-fist this year, despite a bear market that’s gripped
    the market for digital currencies.
  • Crypto trading revenue could more than double to as
    much as $4 billion in 2018, according to a new
    report. 

Bitcoin
has been stuck in the doldrums for much of 2018
, but that
doesn’t mean every market participant is heading to the poor
house. 

In fact, a recent Bloomberg News report found that crypto
exchanges are set to rake in twice as much money as last year
even though bitcoin is down a whopping 51%, according to Markets
Insider data. In total, the market for digital currencies has
shed over $500 billion since it topped $800 billion in
January. 

Exchanges, which notably experienced outages and hacks as bitcoin
soared to $20,000 at the end of 2017, make money by facilitating
the matching of buyers and sellers. 

Citing data from Sanford C. Bernstein & Co,

Bloomberg reported that crypto exchange trading revenues
could more than double to as much as $4 billion in 2018.
In
2017, they brought in about $1.8 billion. Only global cash
equities businesses on Wall Street beat crypto trading
revenues.

San Francisco-based Coinbase is enjoying 50% of these revenues,
Bernstein found.


Exchanges may get a further boost if they’re able to lure larger
investors to their platforms with so-called white-glove
services.

Offering these services to large institutions — from face-to-face
meetings to block trades — is one way the market could mature,
experts says.

Kiran Nagaraj, KPMG’s leader of cryptocurrency services, said
larger investors need to be supported on crypto-specific issues
such as managing crypto forks — when a crypto splits into two —
for them to enter the market in a serious way. Big investors,
Nagaraj says, don’t want to be concerned with the technicals.

“They’re in the investment business,” he said. “They can’t hold
their own private key. Maybe you’ll find some that’ll do it,
but they are looking for market exposure. They don’t want to
deal with the operations.”

See also: 

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