LocalBitcoin Suffers a Massive 30% Drop in Trade Volumes, Even In Low Economic Freedom Areas
From the first week of October, LocalBitcoins, a cryptocurrency exchange, could only watch as their trade volumes went into a freefall. At the end of last week, the exchange only saw around $38.49 million in BTC traded, while this may seem high to conventional people, for the finance industry, this is not a good sign.
For LocalBitcoins itself? It’s the lowest trading volume (Measured in USD) since September of 2018. Tallying it up, LocalBitcoins has lost more than a third of its trading volume within a month.
Excluding the trading volume in terms of USD, the number of Bitcoins being traded has dropped even more than the monetary value of it. With only 4,595 BTC changing hands last week, LocalBitcoins is experiencing one of the worst trading weeks in their entire existence. The only time they traded less Bitcoin was back in June of 2013, a year after they started trading altogether. Compared to last month, where they show trading at 5,344, which means they experienced a hefty drop of 13%.
Most of this diminished trade volume is a direct result of reduced trading activity in both Sub-Saharan Africa and Eastern Europe. These two regions underwent a drop-in activity around 35%-40% in trading volume from the month before. While the Asia-Pacific region constitutes a small part of LocalBitcoins’ trade volumes, the firm still felt the massive 40% trade volume drop that happened in the region.
Digital Gold for the Third World
Interestingly enough, it’s been discovered that LocalBitcoins has a hold on a market niche that very few expected. It’s the most popular in countries with high corruption and low economic freedom. Throughout the 200 plus countries that the platform can serve, the highest trade volume increases were in places like Nigeria, Russia, Columbia, and Venezuela. These countries hold disproportionately high numbers of trade volume, considering its relatively low GDP or population.
Many speculators believe that bitcoin can be considered a “haven asset” due to its properties, so many people from economically unstable countries could see Bitcoin as a way to keep their funds safe. While there are a few issues about this, the most prominent being Bitcoin’s extreme volatility, it hasn’t stopped people from seeing it like that.
Even with this unexpected foothold in the Bitcoin trading market, LocalBitcoins is still falling in trade volumes. The reason for it has less to do with LocalBitcoins and more to do with the world’s bitcoin market slump. Trading volumes on crypto exchanges have been falling across the board. Messari has recently shown some troubling news: Where there was once a trading volume of over $4 billion in Bitcoin, there is now only $200 million. That’s an incredible 5% of what there once was.
Mati Greenspan, a market analyst at eToro, pointed this out on a tweet as well,
On the top 10 exchanges, bitcoin has traded less than $200 million. This is from data compiled by @MessariCrypto. During the peak a few months back, this number easily reached $4 billion. pic.twitter.com/7FsNBZpivA
— Mati Greenspan (@MatiGreenspan) October 15, 2019