Over-concentration of liquidity in the crypto market: Why the risk of a single exchange is worth caution

【CoinPush】A recent market research has pointed out a phenomenon worth noting: the liquidity in the entire crypto market is overly concentrated in a few large exchanges, which has hidden risks.

What exactly is happening? Taking a leading exchange as an example, its spot trading volume reached $15.3 billion, and its open interest in derivatives was as high as $27 billion. While such figures demonstrate its market position, they also mean that too much capital and risk are concentrated on a single platform.

The severity of the problem lies in several obvious shortcomings of this exchange: first, it lacks formal regulatory authorization; second, it was penalized in the US for inadequate anti-money laundering measures; third, it has not obtained the EU MiCA compliance license. These are not minor issues.

Lessons have been learned from history. In October, a wave of crashes in the crypto market directly led to the liquidation of $19 billion in futures positions. At that time, this exchange also experienced price deviations and account access issues. Imagine if such an event happens again, or if the platform faces operational, legal, or even technical shocks, it might not just be a problem for this platform but could affect the entire market.

This is why market diversification and reducing the risk of reliance on a single platform are becoming especially important.