Crypto trading tumbles as investment scramble unwinds
(Repeats Friday story without changes)
* Average daily crypto trading volumes peaked in December
* Volumes still up massively on early 2017 levels
* Retail interest declining after price drops, regulator
By Tommy Wilkes
LONDON, April 20 (Reuters) - Trading activity on
cryptocurrency exchanges has halved from its December peak,
industry data shows, as retail interest in the virtual coins
declines and the prices of many remain far below their recent
Average daily traded volumes across cryptocurrency exchanges
fell to $9.1 billion in March and to $7.4 billion in the first
half of April, compared to almost $17 billion in December,
according to data compiled by crypto analysis website
Rocketing prices of digital currencies such as bitcoin
fuelled a mania in the sector towards the end of 2017 as retail
investors across the globe scrambled to get a piece of the
action. That triggered regulatory warnings and threats to crack
down on the market.
China, a major market, has shut down local cryptocurrency
Since peaking in December and January, bitcoin's price
has more than halved, while the second and third
largest cryptocurrencies, ethereum and Ripple's XRP
have lost even more of their value.
But crypto-trading volumes in March and April have only
fallen back to their levels of November. They remain as much as
25 times above their levels of March-April last year.
"Volumes are down because there was a hype cycle in December
on the back of futures products coming to market. You'll find
that most of that was retail-driven, with Korea and Japan as
major instigators," said Charles Hayter, London-based
"The governments have now dampened some of that irrational
People involved in the industry say trading activity outside
of exchanges, on over-the-counter markets, where larger
institutional investors tend to trade, has held up far better.
Major exchanges with drops of more than half in daily traded
volumes between December and March include Bitfinex, San
Fransisco-based Coinbase, Luxembourg-based Bitstamp and
Poloniex, which was recently bought by Goldman Sachs-backed
cryptocurrency start-up Circle.
A person close to Bitstamp said volumes were directly
related to overall interest in cryptocurrencies, but that the
exchange had maintained its market share between December and
April. The other exchanges did not respond to requests for
The slump in trading volumes will be seized on by critics of
digital currencies as a further indication they are a giant
Ponzi scheme that is now unravelling.
But people active in the industry say short-term price and
trading swings are to be expected for a highly disruptive
technology, and that true believers in the power of digital
currencies will remain invested for the long-haul.
"The crypto market ... is set to soar over the next few
years and beyond, as more and more investors appreciate the
fundamentals," said Nigel Green, CEO of deVere, a financial
consultancy which operates a crypto exchange app.
"Whether traditionalists like it or not, the clock on
digital currencies isn't going to be turned back."
Not all of the falls in trading volumes can be explained by
weaker investor appetite.
Restrictions in countries like China will have hit exchanges
used heavily by Chinese investors disproportionately, while
other trading platforms may have been given a boost by the
listing of new cryptocurrencies during the year.
Many new exchanges have also opened, taking market share
from older platforms.
Some like OKEx and Huobi have grown their volumes since
December despite the broader decline, with March among their
strongest months to date.
The data compiled by CryptoCompare covers most of the
biggest exchanges and the company said it added new exchanges to
its database as and when their volumes hit significant levels.
Other data providers may have slightly different ways of
calculating volumes, particularly when one cryptocurrency is
traded against another rather than against government-backed
fiat currencies like the U.S. dollar.
Some exchanges in Japan, one of the biggest markets for
crypto investment, do not provide trading volume data.
(Reporting by Tommy Wilkes; Editing by Catherine Evans)
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