Digital Asset Markets — Q1 Update
After last year’s phenomenal surge in digital asset prices and trading volumes, 2018 was off to a rough start. But how rough was this start and how does it compare to Q4/2017?
To find out, we collected and analysed trading data from 70 digital assets exchanges worldwide. In this article, we will focus on the developments of the 10 most traded digital assets over the past two quarters. For a review spanning all of 2017 we refer the reader to “The Evolution of the Digital Asset Market in 2017”.
Our key findings are:
- Q1/2018 saw the highest digital asset trading volume in history,
- Trading volumes as well as prices decreased by more than 50% from January to March,
- South Korea’s and Japan’s market shares were cut in half,
- Hong Kong surpassed the US and became the most active digital asset market in the world.
Quarterly Trading Volume Up Despite Downward Trend
Surprisingly, Q1/2018 was the quarter with the highest trading volume in history and in particular it exceeded that of Q4/2017. Whereas Bitcoin’s (BTC) trading volume increased by a moderate 7%, Ether’s (ETH) and Ripple’s (XRP) trading volumes were up more than 60%. The only two digital assets whose trading volumes decreased were Litecoin (-5%) and Bitcoin Cash (-54%).
Despite the increase on a quarterly basis, trading volumes have declined sharply since January.
Volumes and Prices in Free Fall
When looking at trading volumes (measured in the reference digital asset), most of the Top 10 digital assets saw a simultaneous decline in trading volume and price in February and March. The only exceptions were Bitcoin, whose trading volume was highest in February and EOS, whose trading volume picked up again in March.
Koreans Lose Interest in Ripple and Bitcoin Cash
The sharp decline in Bitcoin Cash’s (BCH) trading volume can almost entirely be attributed to the decreased interest in South Korea. Whereas BCH was the most popular asset in KRW markets in November 2017 (even more popular than Bitcoin!), it’s volume plummeted to an all-time low in March 2018. Similarly, interest in Ripple (the most traded asset in January 2018) declined steadily over the past two months. At the same time, XRP and BCH suffered the largest declines in prices with over -70% in Q1 (compared to less than -50% for the remaining eight assets). Thus, it seems that if Koreans lose interest in an asset, it is indeed bad news for the price.
Korea’s and Japan’s Market Shares Cut in Half
Given the loss of interest in its formerly most popular assets, South Korea’s global market also dropped from 18% in Q4/2017 to 11% in Q1/2018. Similarly, Japan’s share declined from 10% to 5%. Simultaneously, China’s market share rose from 8% to 19% and Hong Kong became the biggest digital asset market with a share of 26% —dethroning former champion USA whose share is now at 24%.
Conclusions
Fueled by the all time highs of January, Q1/2018 has seen the highest trading volume in the short history of the digital asset market. However, both prices and volumes have declined sharply following this record month. The biggest declines in trading volumes happened in the former powerhouses of crypto, Japan and Korea. Even though all digital assets suffered severe price drops of around 50%, XRP and BCH, the two digital assets that have fallen out of South Korea’s favour, have seen the sharpest decreases with -77% and -73%, respectively. The biggest gainers in terms of trading volume was China, whose market share more than doubled. At the same time, Hong Kong (Bitfinex, EXX, OKex) surpassed the USA in trading volume and is now the most active digital asset market in the world.
*Data Acquisition and Data Analysis
All data has been obtained from cryptocompare, saved as an sqlite database, queried with pandas and visualized with infogram. All charts are interactive and can be customized by (un-)selecting items. When hovering over data points additional information is displayed. Selecting different tabs or running the play button shows different datasets. We excluded bitFlyerFX as it was reporting unrealistic data. What happened if you don’t do this can be seen in Coindesk’s Q1 report.