Digital Asset Markets — Q2 Update
True or False: “If Q1 was bad, then Q2 was even worse!”
Many followers of the digital asset space, may remember Q2/2018 as another bad quarter for crypto. But is this actually true or just table chatter? To find out, we collected trading data from 126 digital asset exchanges* worldwide and looked at key indicators of the Top 10 most traded digital assets.
Our key findings are:
- Altcoin prices mostly increased, while Bitcoin lost value,
- Trading volumes plummeted by 36% from Q1 to Q2 but show signs of recovery,
- EOS is the only clear winner of Q2 in terms of trading volume and price; EOS dominates the South Korean market,
- USA’s global market share almost halved; Asia now makes up 75% of the global digital asset market,
- Trading volumes in USD continue to decrease, while USDT (Tether) trading volumes remain relatively constant.
USA’s Market Share Continues to Decline
Even though all market’s lost trading volume (measured across USD, EUR, KRW, JPY, GBP, RUB, BTC, ETH and USDT markets) in absolute numbers, the decline was the smallest for Hong Kong based exchanges, down from $2.0B/day in Q1 to $1.6B/day in Q2, leading to an increase of its market share to one third of global digital asset trading. The biggest drop in volume was seen in the US, down from $1.7B/day in Q1 to from $0.6B/day in Q2, falling even behind South Korea. For comparison, just one year ago, in Q2/2017 (with $0.5B/day), the US accounted for nearly half of the global digital asset trading volume. Even though global digital asset trading volume increased by almost 400% compared to Q2/2017, the US only saw an increase of 20%.
Interestingly, when looking at small-cap altcoins (Top 100–1000), the trend remains the same — but the numbers are even more significant. Whereas one year ago, the US accounted for more than 75% (!) of low-cap trading volume, today this number has dropped below 10% and former Chinese exchanges (in particular Binance) account for 58% of trading volume.
Prices Up and Volumes Down
Between April 1 and July 1, prices of seven out of the top ten digital assets either increased (ETH +19%, EOS +45%, TRX +18%, ETC +18%) or only decreased slightly (XRP -4%, ADA -4%). Bitcoin lost 7% in value and LTC and NEO are down more than 30% over the last quarter.
When it comes to trading volumes, the picture changes completely and seven out of ten assets saw their trading volumes drop by more than 40%. The biggest loser was Ripple (XRP) with a decrease in volume by more than 65%. The only asset with an increased trading volume was EOS with an impressive gain of 260%.
Looking at the development month by month, we can see that EOS single-handedly kept the overall trading volume on par with March 2018 in April and May and only dropped below the March level in June.
Coin Volume Shows Upward Trend
Looking at the volume of coins traded (rather than their value in USD), we see an upward trend for most altcoins and only Bitcoin trading sees declining interest. We could not identify a clear correlation between coins traded and their price development.
Korea Continues to Set the Tone
“If you want to know what’s going on in crypto — look at South Korea.”
Whereas globally the number of coins traded did not show a clear correlation between volume and price, when just looking at trading activities in South Korea a clear correlation was observable. Just as in our Q1/2018 report, Korea’s sentiment seems key to a digital asset’s price development. Both in Q1 and Q2, Korean Won (₩) markets were the only place in the world, where trading of an Altcoin overtook Bitcoin — not just marginally but by over 100%. Whereas in Q1, this favorite was Ripple, in Q2, EOS was Korea’s favorite.
USD Overtaken by USDT
Owing to the decline of trading volume in the US, it is perhaps no surprise that trading volume in USD is also decreasing steadily. Even though trading volume in USDT (Tether USD) has remained relatively constant, in the current bear market, being constant equates to a significant increase in market share.
Conclusions
Returning to our original question, “Jein” (German for “yes and no”) seems to be the best answer. Whereas digital asset prices fared better than expected (mostly increased on a quarterly basis), trading volumes continued to drop. On a global scale, this drop is an expected consolidation from the mainstream-hype fueled all-time highs of January 2018. Looking back just one year, trading volumes are still five times higher and also prices of most digital assets are still up significantly. Thus, globally speaking, things are better than expected.
However, when just looking at the US market, our study showed a concerning trend. The US lost it’s former leading position in the digital asset market and continues to fall behind at an alarming rate. Whereas one year ago, the US accounted for 50% of global digital asset trading, this number has dropped to an all-time low of just 12.6% in Q2/2018. At the same time, Asia’s market dominance rose to 75%.
*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 shows additional 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 — JPY trading volume was overestimated by 300%. We also excluded data from BitMart as it was showing unrealistic historical data.
