Declining Volume Across Coinbase & BitStamp Suggests Investor Interest Is Low

In a recent publication, Diar reports that Coinbase trading volume has officially hit a yearly low. As the bear market continues, trading volumes continue to decline across the board.

Prominent exchange Coinbase, has been one of the worst hit by the bear market - as their trading volume, measured in USD, shows:

coinbase trading volume.pngSource: Diar

As shown, total trading volume is below Q3 2017 levels. Q4 2017 and Q1 2018 saw massive volume spikes, as the entire market rallied behind BTC. However, since then, volume has been declining.

Now that it’s October, we can confidently say that Q3 was Coinbase’s slowest quarter this year.

Coinbase is not alone, below is BitStamp’s volume over time:

bitstamp trading volume.pngSource: Diar

BitStamp’s volume, like Coinbase, is declining. Unlike Coinbase however, their Q3 2018 volume was higher than in Q3 2017, but as the data show, the volumes are far from impressive.

Binance, the world's largest exchange by volume and a very popular altcoin exchange, however is faring better than both of these exchanges:

binance trading volume.pngSource: Diar

Launched in early 2017, Binance exploded in popularity Q4 2017 as altcoins became more popular. Since then, their volume has declined, but by far less than rival exchanges Coinbase and BitStamp.

Binance only offers altcoin trading (no fiat), which indicates that spot BTC purchasing (on Coinbase and BitStamp) is down, but trading altcoins (on Binance) is still popular.

In addition to monitoring trading volume, Google Trends offers powerful insights into overall interest in various search terms in the space.

For example, here’s the Google Trends result for “bitcoin” for the past 12 months:

google trends bitcoin.png

Click here to read how a trader developed a trading algorithm that buys when people are searching for “buy bitcoin.”

Tales Of The Tether

Besides trading volume, another metric to consider is the Tether (USDT) trading share:

tether diar.pngSource: Diar

As the chart from Diar shows, the percentage of USDT trading has grown significantly - climbing all the way up to 57% of total trading.

Increase in USDT trading could mean that the market is being controlled by traders, not everyday investors: Investors don’t trade with USDT - they mostly purchase using actual USD on exchanges like BitStamp and Coinbase.

Traders, on the other hand, use USDT to keep their trading balances denominated in dollars. Tether is available on Binance and Bitfinex, two exchanges primarily used by traders.

Although Tether volume is increasing, some traders are opting out of the stablecoin. After reports that Tether could be having banking issues, traders have been moving away from USDT and are instead using actual dollars.

OKEx Was the Top Crypto Derivatives Exchange in September, Report Shows

Leading cryptocurrency exchange OKEx was the top crypto derivatives exchange in the month of September, trading a total of $90.3 billion in total. Huobi followed suit, trading $84 billion.

According to CryptoCompare’s September 2019 Exchange Review, the crypto trading platform represented 33.7% of the daily derivatives volumes, trading $3.08 billion per day. Behind OKEx was Huobi with $2.82 billion traded a day, followed by BitMEX’s $1.88 billion.

Cryptocurrency exchanges like Deribit and CryptoFacilities, which is FCA-regulated, represented only $334 million and $74 million a day, respectively.

Top derivatives exchangesSource: CryptoCompare Exchange Review

The report notes that the most traded derivatives product by trading volume was BitMEX’s perpetual BTC futures contract, as its total trading volume for the month was of $41.7 billion. Other top traded products were BTC futures contracts expiring on September 27, with Huobi’s contract seeing $23.3 billion traded, while OKEx saw $17.4 billion traded.

OKEx’s lead when it comes to cryptocurrency derivatives was likely derived by its offering. The cryptocurrency exchange has various futures contracts being offered on its website – not just for BTC but for other top cryptocurrencies like BCH, BSV, EOS, XRP, and TRX.

Similarly the cryptocurrency exchange, which earlier this year announced it’s working on developing global compliance standards for cryptocurrency exchanges through a Self-Regulated Organization (SRO), offers perpetual swaps for these cryptos.

As CryptoGlobe reported, CryptoCompare’s report for August found similar results when it came to OKEx. Despite a market-wide drop in terms of derivatives trading volumes, the cryptocurrency exchange managed to capture over one-third of the market in August.

CryptoCompare’s September 2019 Exchange Review also found that lower-rated cryptocurrency exchanges – according to its Exchange Benchmark Ratings – have been gaining market share in terms of spot volumes.

Per the report, exchanges with an “E” rating represented a total trading volume of $179 billion in September, after seeing an increase of over 30% from the prior month. Exchanges like OKEx, which is A-rated, represented a smaller piece of the pie, with only 14.3% of the market share.