Diversification or Simplification? The Perpetual Challenge of Crypto Traders

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Cryptocurrency users are notoriously evangelical about the benefits and opportunities of these burgeoning markets, but any serious trader will admit that there’s a vast amount of complexity to manage. Furthermore, each new innovation and advancement only seems to add to the problem. 

In the early days of crypto, traders only had access to a handful of centralized exchanges where they could on-ramp to Bitcoin from fiat and trade a limited number of altcoin trading pairs. Which pairs were on offer was a matter to be determined by the exchange. In some cases, a trader would have to open an account at a specific exchange because it might have been the only one offering a particular trading pair. 

The explosion of innovation that came with the 2017 market boom brought more opportunities for traders. It ushered in the era of exchange giants as Binance went head-to-head with existing players like Kraken and Coinbase. Binance’s strategy of offering a vast array of token pairs designed to lure in many traders forced the competition to adapt their relatively meager listings to keep up. 

Around the same time, exchanges also began to take notice of the success of BitMEX and its leveraged Bitcoin futures, along with the fact that regulated platforms like the CME had begun offering Bitcoin-backed futures contracts. OKEx and Huobi launched their derivatives markets, followed by Binance in 2019. 

The crypto winter that followed the 2017 boom also proved fertile ground for cultivating the growing scene around decentralized finance. Platforms like Uniswap and Compound had been growing relatively