Crypto market structure

Why crypto is fragmented

Stocks have a centralized, regulated market and a shared reference price. Crypto was born without a central exchange: dozens of platforms, each with its own order book. The same bitcoin can cost slightly different amounts in different places at the same time.

There are several types of player, each with a different role: the exchange matches orders, the market maker provides continuous prices, the broker routes the order and the custodian holds the assets. These are not the same thing, even when they sit under one roof.

Spot, derivatives and stablecoins

Most crypto volume is not spot trading but derivatives, above all perpetual futures, which have no expiry date and where positions are balanced by a funding rate. The practical consequence: the price is often led by the derivatives market, and the leverage there also moves the spot price.

The second layer is the quote currency. Most crypto pairs are not priced in euros but in stablecoins. That is efficient, but it adds one more counterparty: between the euro and the coin you are buying comes a token with its own reserve and issuer risk.

CEX, DEX and automated market making

A centralized exchange maintains a traditional order book and holds the customer's assets. A decentralized exchange operates on a blockchain without an intermediary: the price does not come from an order book but from a liquidity pool and a mathematical formula. The same coin, two completely different structures and different risks.

Why one exchange is not enough

On a single exchange you see only one book. Thin depth means slippage: a large order moves the price against you. The cost does not show up as a fee. It hides in the execution price, and it grows the larger the order is.

Smart routing splits an order across several sources at once and assembles the best overall price from them. The goal is best execution: the best overall result in terms of price, cost, speed and likelihood of execution. It is an aim, not a guarantee of the cheapest price every time.

Maker, taker and arbitrage

Exchanges steer liquidity with their fee structure. A maker leaves an order in the book and adds liquidity, so it pays less. A taker immediately takes an existing offer and pays more. For you this means: a market order is fast but more expensive, while a limit order is cheaper but does not guarantee execution.

Arbitrage keeps prices close to each other: if bitcoin is cheaper in place A than in place B, traders buy in A and sell in B. The differences still don't disappear completely. Transfer delays, costs and tied-up capital leave persistent small gaps, which can blow out into large ones under stress.

This content is for information purposes only and should not be construed as investment advice or a recommendation. Investing always involves the risk of losing capital. The value of financial instruments and investments can go up or down, and past performance is no guarantee of future returns.