Major Crypto Exchanges Lose Trading Volume to Smaller Peers with Larger Altcoin Offerings, Research Suggests

Major crypto platforms have posted significant declines in trading volumes, while rivals enjoy growth despite recent market downtrend.

Major Western cryptocurrency exchanges including Coinbase, Bitstamp and Kraken have suffered steep declines in terms of trading volumes, while newer platforms in Asia are gaining market share, according to a recent report by research group Diar.

The report, which cites data from CoinApi, revealed that Coinbase handled 83% less volume in July than in January this year, while trading on Bitstamp and Kraken decreased by 73% and 68%, respectively. By contrast, Binance’s volumes remained steady in the period and even posted a 21% increase last month versus June. Trading on peer OKEX hit a record high in July, rising some 32% since the beginning of 2018.

Explaining this trend, Diar noted that the major crypto exchanges based in the US are facing stricter regulations in regards to altcoins, thus they have been restricting their offerings to larger cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH). Coinbase and Bitstamp list just five coins, while Kraken supports 24, compared to the hundreds of trading pairs offered by OKEx and Binance. And while the recent bear market has seen Bitcoin outperforming the majority of assets, the altcoins prove to attract investor interest and underpin crypto exchange volumes.

“Over 50% of traded volumes on cryptocurrency markets revolve around the majors, Bitcoin, Ethereum, XRP, Bitcoin Cash and Litecoin. However, the market downfall is taking major US exchanges in its wake,” the paper read.

A separate report revealed last week that despite the recent market downtrend, income generated by cryptocurrency exchanges could more than double and hit $4 billion in 2018. The research, conducted by investment management firm Sanford C. Bernstein & Co., further suggested that Coinbase may soon have an “unassailable competitive position”. According to estimates, the San Francisco-based digital asset exchange currently accounts for a whopping 50% of the transaction revenue pool.

Diar’s recent research paper also looked into Coinbase and noted that the platform is apparently making bold moves to stay on top of the game. The company is adding exposure to more digital assets with its Decentralized Bulletin Board Paradex, which as of last week had 19 cryptocurrencies.

At the time of Coinbase’s purchase of Paradex back in May, president and chief operating officer Asiff Hirji stated:

“This will significantly enhance the proposition for our customers in terms of what they want to trade and how they want to trade it. As soon as we can we're going to turn it on in the U.S. We're greatly increasing the number of things you can trade, and we're doing it in a compliant way.”