The Evolution of the Digital Asset Market in 2019 — Q1 Update

After 2017’s Crypto-Optimism and 2018’s Crypto-Pessism, it is time for Crypto-Realism.

After a year of lower and lower prices, crypto has made its long-awaited come-back. In Q1/19, both trading volumes and overall digital asset prices increased and show a strong upward trend. Most notably, prices of four of the Top 10 most traded digital assets increased by more 25% — gains which haven’t been seen since 2017.

Crunching numbers of 192 digital asset exchanges worldwide led to the following key findings:

  • Q1/2019 best quarter for crypto since 2017,
  • USA’s global market share increased for the first time since 2017 but is still far behind Asian markets,
  • Korean trading activity shows the highest correlation to (global) digital asset prices.

Best Quarter Since 2017

Between Jan 1 and April 1, prices of four of the top ten most traded digital assets saw significant gains. The best performing asset was Litecoin with +89%. Bitcoin saw a moderate gain of 7% whereas Ether and Bitcoin Cash remained almost constant. The only losers were Ripple (XRP) and Ether Classic (ETC) with a decline of 15% and 10%. For the first time, the stable coin Tether (USDT) entered the ranks of the most-traded assets.

Altcoin Portfolios Outperform Bitcoin

During 2017, investors rushed into altcoins (i.e. digital assets other than Bitcoin) fueling the creating of a crypto bubble. Once the bubble burst, the reverse phenomenon happened and investors sought refuge in the relatively stable Bitcoin or stable coins such as USDT.

To visualize the performance of altcoins, we compared 5 different equal-weighted portfolio strategies. The first strategy invested only in Bitcoin and the remaining strategies invested in the Top 5, 10, 50 or 100 most traded digital assets.

Comparison of 5 equal-weight portfolio strategies in the past 5 quarters. Stable coins have been excluded from investment strategies. Top 5 portfolio contains BTC, ETH, LTC, XRP and EOS and the Top 10 portfolio additionally includes BCH, DASH, NEO, ETC, and IOTA.

While in the past year, Bitcoin outperformed all other strategies in almost every quarter, in Q1/19, Bitcoin’s performance is far behind. The biggest gain was seen by an investment in the Top 5 cryptocurrencies with a gain of 27%. Unlike in 2017, smaller altcoins did not see exorbitant gains signaling that this time, investors are less starry-eyed when it comes to altcoin investments.

US Trading Volumes on the Rise

After its steady decline starting in 2017, for the first time, the US was able to gain market share. Reaching an all-time low of just 8% global market share ($280M/day) in January, it has rebounded to 10% in March ($650M/day).

Evolution of average daily trading volume (across USD, EUR, KRW, JPY, GBP, RUB, BTC, ETH and USDT markets) of the ten most traded digital assets by country.

Globally, trading activity increased throughout the quarter from $3.7B/day in January to $6.6B a day in March. As in Q4/18, Asia still dominates the market with a share of more than 80% and (formerly) Chinese exchanges account for more than 25% of it.

16 Exchanges Responsible for 90% of Global Trading

Breaking down the global ranking by exchanges reveals a typical exponential distribution. The Top 16 exchanges account for more than 90% of global trading and the Top 41 account for more than 99.9% of all assets traded. The highest ranked US exchange is Bitmart coming in on 9th place. The largest individual exchange is OKEX with $600M worth of cryptocurrencies traded per day.

Average daily trading volumes of the Top 22 digital asset exchanges which account for 95% of global digital asset trading. Trading volumes are based on the ten most traded digital assets (across USD, EUR, KRW, JPY, GBP, RUB, BTC, ETH and USDT markets).

Korea Dominates FIAT Market and Drives Prices

The vast majority of trades are from digital-to-digital such as e.g. ETH/BTC or BCH/BTC and the resulting trading patterns provide little information about price development. However, if one excludes all virtual markets (/USDT, /BTC and /ETH) a more insightful pattern emerges.

Even though Korea only accounts for 15% of global trading, it accounts for the majority of fiat trades. The record holds DASH with almost 100% of all fiat trades denoted in Korean Won (₩). At the end of last year, also 97% of all ETC/fiat and 90% of all LTC/fiat trades took place in Korea.

Unlike the rest of the world, Korean’s like to use ‘real’-money to buy virtual money.

So does ‘real’ money drive ‘real’ prices?

Weekly correlation between cryptocurrency prices and their volumes in different fiat markets. Comparison is from Oct 1, 2018 to April 1, 2019. Blanks signify the absence of a particular trading pair, e.g. there is no XRP/GBP or LTC/JPY market. *Note that all volume is calculated in ‘Coins’ traded rather than fiat value traded.

To find out, we determined the weekly correlation between the prices of the Top 10 (excluding USDT) most traded digital assets vs their trading volume (in coins) in different fiat markets. The results are impressive. Korean trading activity is significantly more correlated to prices than any other fiat market. Perhaps surprisingly, DASH’s price doesn’t seem to be highly correlated to Korean trading. However, there is a simple reason, DASH only had negligible trading volume in Korea in October and November 2018 and has become increasingly popular ever since. In fact, if the pattern continues, DASH is probably going to be the next crypto to moon because of its introduction to Korean markets.

Average weekly trading volume of 6 digital assets in Korean Won (₩) compared to global prices.


For the first time in more than a year, the crypto market is seeing a general upturn. The fundamental improvements of the crypto ecosystem in 2018 such as Google’s and Facebook’s reversal of their crypto bans, more legal clarity and interest from endowments and banks, seem to finally bear fruits.

If 2017 was the year of excessive crypto optimism, then 2018 was the year of excessive crypto pessimism. In 2019, crypto seems to finally have found its rightful place. It is an innovative technology with high potential that will only be successful through long hard work and through small steps in the right direction. No matter how ingenious the idea, there is no overnight success — welcome to adulthood crypto!

List of all 192 digital asset exchanges included in our comparison. Country classifications are based on place of main business activity. Formerly Chinese based exchanges that continued to operate under the same domain are listed as “China (formerly)”. We excluded several exchanges that reported inflated volumes due to zero fees, derivates, transaction mining or other issues.

Disclaimer: Nothing contained in this article constitutes investment, accounting, tax or legal advice or a recommendation to buy, or sell any (alt-)coin or other investment, management product or service or pursue any investment strategy. You should not buy any (alt-) coin unless you are prepared to sustain a total loss of the money you have invested plus any commission or other transaction charges. Moreover, past performance is not indicative of future results.

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