LMAX Digital sees surge in trading volume market share

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Digital currency markets have long focused on institutional trading activity metrics in anticipation of greater involvement from traditional asset managers and high net worth individuals. In this report we diagram trading activity across the largest global digital currency exchanges that are accessible by domestic customers, highlighting the quick rise of LMAX Digital–a spot digital currency exchange specifically catering to institutional traders and investors.

Total aggregate bitcoin trading volumes fell in the second half of 2019 to end the year at roughly similar notional levels seen at the beginning of the year. Over the summer, however, volumes had reached a yearly high as bitcoin prices advanced, on June 26, 2019, to reach just over $13,500 per coin–a rise of 268% year-to-date. In the figure below we diagram total notional spot trading volume across the following exchanges accessible by domestic customers at: Binance US, Bitstamp, Bittrex, Coinbase, Gemini, itBit, Kraken, LMAX Digital, and OKCoin. In the first few weeks of 2020, volumes accelerated modestly on price advances.

Figure 1: Bitcoin notional trading volume over 2019

Data for chart sourced from the TradeBlock Professional Platform

At exchanges accessible by domestic customers, trading activity is highest during weekdays, and in particular during midweek, before tapering off into the weekends. In the figure below we diagram average trading volume per day of the week over 2019. Increased trading activity on weekdays vs weekends indicates heightened institutional trading activity vs retail activity.

Figure 2: Bitcoin notional trading volume on a per day basis

Data for chart sourced from the TradeBlock Professional Platform

If we breakdown total notional trading volume per venue, we can see that LMAX Digital has seen a surge in market share compared to other more retail focused exchanges. In the figure below we diagram trading volume market share by spot trading venue.

Figure 3: Trading volume market share over 2019

Data for chart sourced from the TradeBlock Professional Platform

As shown in the figure above, among the polled exchanges, LMAX Digital began the year with ~6% of the total market share and ended the year with ~23%. LMAX Digital is a regulated institutional spot digital currency exchange headquartered in the UK and specifically services: financial institutions, banks, corporations, brokers and asset managers.

Additionally, LMAX Digital saw the highest month-over-month increase in trading volumes over 2019 in comparison to the other exchanges. In the figure below we diagram average month-over-month percent change in trading volume and total cumulative notional trading volume at each exchange over 2019.

Figure 4: Average MoM percent trading volume change over 2019

Data for chart sourced from the TradeBlock Professional Platform

In addition, the rise of various platforms offering derivative products, alongside heightened institutional activity on spot markets, indicates increased adoption. Over the past year, various firms have begun offering futures and/or options markets on bitcoin and other digital currencies. Alongside this rise in product offerings, futures trading volumes on US regulated exchanges reached a record high in 2019.

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