In contrast to the traditional securities market, in which exchanges derive a significant portion of their revenues from the sale of market data, cryptocurrency spot exchanges provide access to their market data largely free of charge. Only the crypto derivatives exchanges have succeeded in partially monetizing their data feeds.
A number of firms play a key role by acting as re-sellers of the data – both cryptocurrency data aggregators and market intelligence providers. Cryptocurrency data aggregators combine multiple exchanges’ market data feeds into one consolidated stream, whereas market intelligence providers often provide analytical tools that sit on top of this information. Altogether, these players are estimated to have made US$94 million in revenues in 2020, representing more than 95% of the entire US$100 million market for crypto data. However, the majority of this comes from the sale of online advertising, not data. This makes sense when one considers the dominant role of retail investors in the crypto market.
Cryptocurrency data providers offer a wide range of information services. While most provide basic market data feeds, only some offer additional services, such as historical data, level II market data, on-chain analysis, and sentiment analysis, the last of which is a remarkably powerful tool for crypto trading. Data providers may also offer cryptocurrency indices and reference data.
With cryptocurrency exchanges undergoing a phase of significant consolidation, and competition heating up amongst the data providers, Opimas expects that, with time, dynamics will shift, and cryptocurrency exchanges will eventually start to charge users for access to their data feeds. Additionally, the data providers Opimas anticipates succeeding will be those who:
- Obtain the proper licenses and certifications,
- Focus on providing low-latency data feeds and
- Partner with leading financial information vendors.