Report Shows Divergence Between LocalBitcoins Volume in Developed and Emerging Markets
The global investment firm Passport Capital has released a new tweet in which they show that they continue to observe a divergence between LocalBitcoins volume in Developed (DM) and Emerging Markets (EM). What is causing this divergence among these two groups?
Crypto Trading Volume in EM and DM
LocalBitcoins is a platform that allows users from different countries to transact Bitcoin (BTC) in a very easy way between peers. The transactions can be processed in person or using a bank transfer. The platform measures the number of Bitcoin that are transacted each day on their platform in different countries and regions.
This is why Passport Capital decided to make a difference between trading volume in Developed and Emerging Markets. The results do not surprise. Indeed, trading volume in Emerging Markets continues growing despite the bear trend that the market experienced in 2018. Things are different for Developed Markets, where the trading volume seems to be falling and increasing its gap with Developed Markets.
As Passport Capital marks, they believe that the difference between these two markets is related to how virtual currencies are conceived in these two markets. They mentioned that volume in Developed Markets follows price speculation, while in Developed Markets they follow utility rather than speculation.
There are countries such as Venezuela in which users have been trying to use virtual currencies to be able to reduce the effects of a terrible economic, social and political crisis that they are living. Virtual currencies provide great utility to those that need to perform cross-border payments, daily transactions or store funds in hyperinflationary economies. Although speculation exists in these markets as well, the volume has been affected much less by these fluctuations.
In Developed Markets, where there are strong financial systems, stable institutions and markets that work properly, virtual currencies have a reduced utility and speculation starts playing a very important role. This is why the volumes fluctuated much more among Developed Markets compared to Emerging Markets.
During the last week of March, almost 1,500 BTC were transacted in Venezuela. In the United Kingdom less than 700 BTC. Although this volume does not include the trading volume in other exchanges, it is possible to see a clear difference between DM and EM.