Cryptocurrency P2P trading global heatmap
We created a visualization to locate countries with the largest changes in P2P Bitcoin trading volume and price deviations of P2P trades from market average.
Below we discuss the methodology applied to prepare data for the heatmap.
1. Raw data sources
We use 3 raw data sources for the heatmap:
a) LocalBitcoins — daily P2P transaction volume by fiat currency
b) Open Exchanges Rates — foreign exchange rates
c) THE SILICOIN calculations — market average Bitcoin price
Inputs (a) and (b) updated every 1 hour. Input (c) updated every 2 seconds.
2. Initial data processing
Data from LocalBitcoins is the major input for the heatmap. LocalBitcoins is the largest P2P Bitcoin trading marketplace by transaction volume. We receive data from public API.
LocalBitcoins provides data about the volume of Bitcoin transactions processed on the platform broken down by fiat currencies used in those transactions. For instance we receive the following data for Canadian Dollar:
- Fiat currency: Canadian Dollar
- 24H trading volume in Bitcoin: 76.8
- Bitcoin average transaction price in Canadian Dollars during last 24H: 4261.14
We receive the same data for all other fiat currencies supported by LocalBitcoins.
Next we calculate derivative metrics from this data. We will continue the example of Canadian Dollar (CAD):
- 24H trading volume in Canadian Dollars: calculated as 24H volume in BTC multiplied by 24H average CAD transaction price
- 24H trading volume in US Dollars: calculated as 24H volume in CAD divided by 24H simple average USD/CAD fx rate retrieved from Open Exchange Rates. We use simple average fx rates because volume fluctuations with 24H period are not observable, therefore volume weighted fx rate cannot be applied
Next we map fiat currencies to respective territories. We do not say countries because Euro is the currency of 26 countries of the Euro area. Therefore you will not find specific data for France or Germany on the heatmap — all countries of the Euro area will have the same values.
The approach described above gives us the best possible approximations of P2P transactions by country. We say approximations because of the following limitations:
- Canadians may transact in US Dollars. But the transaction costs will be much higher — hence volume of transactions with non native currencies is likely small
- P2P foreign exchange rates used for calculations may deviate from observed rates. It happens when governments control official exchange rates. For example we see gross deviations for Venezuela and Iran. There is no way to fix this issue as shadow fx markets do not have an API, so you should be conscious about that
3. Preparation of data for heatmap modes
On the heatmap we provide 3 data types that can be viewed by selecting respective modes in the button group in the top left corner of the page.
3.1. Volume change
On this mode you will see change in the transaction volume for each territory.
24H P2P transaction volumes are too volatile to draw any inferences. Therefore we use 7 days rolling volumes in the visualizations.
Let’s assume the following situation: current time is November 29th, 18:00 and you selected 1 WEEK in the top right corner of the page. On the heatmap you’ll see the following data:
- For each territory: (X/Y-1)*100 where X and Y stand for the following
- X=total volume of transactions made during last 7 days (from November 29th, 18:00 to November 22nd, 18:00)
- Y=total volume of transactions made during 7 days started exactly 1 rolling week ago (from November 22nd, 18:00 to November 15th, 18:00)
If you select 4 WEEKS then Y will become total volume of transactions made during 7 days started exactly 4 rolling weeks ago (from November 1st, 18:00 to October 25th, 18:00).
3.2. Volume per capita
This part is straightforward. We take last 7 days rolling volume (X in the example above) and divide by the population of respective territory in thousands of people.
This mode visualizes P2P transaction volume per capita only on LocalBitcoins. We are working on integrating other platforms in the analysis — updates will be announced separately.
3.3. Price difference
On this mode we show deviation of average P2P price of Bitcoin from market average price across territories.
The methodology is as follows:
- 7 days average P2P price of BTC in USD = 7 days volume in USD divided by 7 days volume in BTC (effectively it is volume weighted average price)
- 7 days average market price of BTC in USD (this one is tricky). First we compute simple average BTC market price for seven consecutive 24-hour periods. Next we calculate volume weighted average BTC market price for each territory. You will notice that 7-day average BTC market price varies across territories
- On the heatmap you will see percent deviation of the former from the latter
3.4. Charts
In this section you will find historical volume and historical price for each fiat currency.
3.5. Google search interest
This is an additional piece of data which complements the LocalBitcoins heatmaps. Methodology of Google Trends is not intuitive so we suggest reviewing their write-up on this topic.
Please note that embeds provided by Google Trends are not stable and may not load from time to time. There is nothing we can do about that from our side. If you do not see both embeds loading — reload the page.
4. Instead of conclusion
Your feedback will help us improve the methodology.
Please reach out to us with any questions or suggestions via Twitter or email. Or comment below.
THE SILICOIN team
