LocalBitcoins Weekly BTC Trading Volume Drops to a 7-Year Low, Competition Picking Up
Bitcoin volumes from LocalBitcoins has hit a 7-year low; the peer-to-peer OTC exchange has been a dominant player in the field since 2013. Latest stats, however, shows that weekly traded BTC are now at 3,144 ($28 million) compared to a high of 13,000 Bitcoins last year.
Data from Coin Dance further revealed that the platform’s activity has been on a steady decline since the crypto market bull-run in 2017. During that period, LocalBitcoins volumes recorded 7,519 BTC in a week which translated to $129 million as per the prevailing market prices.
Despite a bear market during the first half of 2019, the average amount in dollar values traded on LocalBitcoin's in the last year are higher than 2020’s stats;
Why is the LocalBitcoin Volume on a Decline?
This plunge in activity has been attributed to the company’s change in KYC/AML approach. LocalBitcoins which operates on a Finnish license enhanced their due diligence process not sparing even the smallest of traders. In a country like China, most of the platform’s participants had already begun to slowly leave, over the past two years. However, the exit rate was then accelerated towards the end of January 2020 when the OTC Fiat-crypto provider suspended some accounts.
Other players like Paxful have also emerged to serve this niche, therefore, destabilizing LocalBitcoins’ monopoly, like market position. Given this dynamic, LocalBitcoins is currently in a tough spot, as European regulators close in more on crypto operations.
The future of this P2P exchange hasn't yet faded away, although it will no longer be enjoying their large market share going forward. Developing economies in South America and Africa still find value in LocalBitcoins’ OTC given local currency volatility in countries like Venezuela and Argentina. In addition, the regulatory trends might also catch up with LocalBitcoin's competitors, which would probably trigger a similar reaction from crypto users trying to avoid the oversight.