The Evolution of the Digital Asset Market in 2019 — Q2 Update

Anton Muehlemann
Jul 26, 2019 · 4 min read

Crypto is back and Bitcoin leads the way!

Slowly but steadily, crypto climbed back towards its old records. Even though prices are still well below the Jan 2018 crypto bubble hype, Q2/19 trading volumes are three times as high as Q1/18!

Apart from record trading activity, by crunching numbers of 184 digital asset exchanges we identified the following global trends:

  • Q2/2019 best quarter for crypto investors since 2017,
  • Bitcoin outperforms smaller cryptocurrencies,
  • USA’s global market share continues to rise while Korean trading activity slows down,
  • Global trading is becoming more diverse and shows less concentration on just a few exchanges.

An All Winner Quarter

Between April 1 and July 1, all top ten most traded digital assets increased in value. The best performing asset was good old Bitcoin with +155% and was closely followed by its largest fork, Bitcoin Cash, which gained +148%. Ether and Litecoin both doubled in value and the ‘worst performers’ were Ripple (XRP) and DASH with a plus of about +30%. Along with the prices volumes also shot up. For instance, Bitcoin Cash and Tether USD were traded almost five times as much as in Q1/19 and most other cryptos more than doubled in volume. The one exception to the rule was DASH which became 20% less popular due to a lack of interest by Korea.

Change in price (in USD) from April 1 to July 1, 2019 vs. change in trading volume (across USD, EUR, KRW, JPY, GBP, RUB, BTC, ETH and USDT markets) from Q1/19 to Q2/19.

Unlike Q1/19, were Altcoin portfolios beat just holding Bitcoin, simply holding Bitcoin turned out to be the best strategy in Q2/19. Even when looking at year-to-date performance, Bitcoin still beats holding baskets of altcoins. This trend is a possible reason for the termination of several crypto basket products such as the Coinbase bundle and the Coinbase Index Fund.

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, BCH and XRP and the Top 10 portfolio additionally includes EOS, ETC, DASH, BNB, and NEO.

In Q2, Bitcoin continued its long outperformance run that started in 2018. This dominance signals that in uncertain market situations, investors seek safety in the biggest, oldest and most well-established cryptocurrency. While in 2017, a Top 100 ‘S***-coin’ portfolios skyrocketed, this time around its performance is sub-par. Since Jan 1, 2019, a Top 100 portfolio only gained +68% whereas Bitcoin is up more than +170%.

Global Trading Hits New All-Time High

At the peak of the crypto bubble in Q1/18, $7B worth of crypto was traded worldwide and trading activity has been significantly lower ever since — until now! In Q2/19, global trading crushed the previous record with an average daily trading volume of $14B. For comparison, this is around 3 times the daily trading volume of Apple (APPL) on the Nasdaq.

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.

After its steady decline starting in 2017, the US continues its strong year by moving up the ranks to 4th place in global digital asset trading. In Q1/19, $450M worth of crypto changed hands in the US every day, in Q2/19 this number more than doubled to $1.1B/day. In contrast, former crypto powerhouse South Korea fell from rank 3 in Q1/19 to rank 6 in Q2/19. This fall was in spite of an overall increase in trading volume from $700M/day to $800M/day — it just couldn’t keep up with the overall market that more than tripled in the same time period.

Exchange trading still follows a typical exponential distribution but has become more diverse compared to Q1/19. In Q2/19, 90% of global trading is processed at the Top 21 (+5) exchanges and 99% at the Top 49 (+8) exchanges. The highest-ranked US exchange is Bitmart coming in 12th place. The largest individual exchange is OKEX with $1.8B worth of cryptocurrencies traded every 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 Remains Adventurous but Loses Influence

In previous quarters, Korea proved to be one of the most influential crypto markets capable of driving global prices. This was not at last due to their frequently changing interest in different Altcoins. However, in Q2/19, Korea fell behind in global market share and saw its influence dip as a result. DASH remained extremely popular in Korea but did not impress the rest of the world.

In all other currencies, Bitcoin was by far the most popular crypto asset and Japan remained true to its alleged Japanese founder and almost exclusively traded Bitcoin for Japanese Jen (apart from some XRP).

Conclusions

Q2/19 has been a record quarter for the global crypto market. We saw the highest ever recorded global trading activity and Bitcoin stayed above $8000 for the longest time in history.

These new records are the result of tireless efforts of the crypto community to raise awareness, build better infrastructure and making trading easier and more accessible. After many recent setbacks, it is great to see how these combined efforts come to bear fruits. At last, crypto is on its way to unfold its true potential and make a dent in the global financial market.

List of all 184 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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