Despite Sustained Bear Market, Huobi Crypto Exchange Still Profitable Each Month, Says Chief Executive
Crypto winter is in full swing and cryptocurrencies are down about 90 percent from their peaks. However, Beijing-based Huobi is still making profits amidst this prolonged bear market, according to the chief executive of Huobi Global, Livio Weng Xiaoqi.
The trading volumes have shrunken to about tenth of its record, at one point, but Xiaoqi told a Chinese publication, the company is still profitable each month.
“We do not know how long the bear market will last, so it is still possible that we will struggle to survive. We have to plan in advance and spend money carefully.”
When bears hit the market, exchanges are the first victims of its effect. Though he declined to specify Huobi’s revenue, he said it is generated to the most part from the transaction fees.
However, the exchange is laying off people that at last year's start offered one of its senior executives the highest year-end bonus of 300 BTC. Other companies like ConsenSys have also announced their plans for layoffs.
The focus is still on expanding its main exchange business that contributes 70 percent of its total revenue, according to Weng. However, the company is cutting staff in the units that are making losses like news aggregation and venture funding.
Still, the company has a total of 1,300 employees globally after cutting 100 positions. Just earlier this month, Huobi shut down its subsidiary Shenzhen that hired 30 people for research and building applications. From a couple of dozens, the Huobi Info news app is now being maintained by a small staff.
One of the world's biggest Bitcoin exchange by trading volume, Huobi was founded in 2013. According to the data provided by Coinmarketcap, Houbi manages the daily trading volume of about $370 million. This is about half of the trades made by the leading crypto exchange by trading volume, Binance.
In order to attract Chinese retail investors, the platform offered zero transaction fees. However, due to the ban on cryptocurrencies in Beijing, the exchange has to migrate its business to Singapore in September 2017.
Over 70 percent of Huobi Global users are Chinese who either use a VPN service or live outside China due to the ban. Weng further shared, Chinese users are followed by Russian and English speakers.
“Our greatest advantage over competitors is that we have licenses in all major countries – we are the only one among top global exchanges,” Weng said.
With regulators gearing up to regulate the crypto exchanges, Huobi has obtained licenses to operate fiat to crypto exchanges in the US, Europe, and Japanese markets.
Joyce Yang, the founder of New York-based Global Coin Research that focuses on Asia’s crypto space said,
“Despite their success overseas, I think it would be very hard for them [Huobi] to compete with US exchanges locally. They can have a very successful business focusing on Asia and China, and they should really just double down there.” “But in the exchange space, everyone is trying to hedge themselves and compare themselves with each other,” said Yang.
Earlier this month, they launched Huobi Chat that aims to attract 1 million users, where efforts need “a window of opportunity, another bull run, to pay off”, said Weng.