Coinbase, the largest Bitcoin and cryptocurrency exchange headquartered in the United States, has seen a steeply declining trading volume during 2018, amid what many consider to be a bear market.

Coinbase’s trading volume has declined 83% during 2018, compared to 73% for Bitstamp, another major USD exchange. However, overseas exchanges like OKEx and Binance that have more relaxed regulations have actually seen steady or rising volume during 2018.

Essentially, Coinbase’s trading volume has been declining more rapidly than all the other major exchanges in the world, indicating a shift of customers from Coinbase to overseas markets. This might partly be due to Coinbase only having six cryptocurrencies listed on its main exchange. For example, Kraken has 23 cryptocurrencies listed and its trading volume hasn’t dropped as fast as Coinbase. More crypto trading pairs seems to translate to higher trading volume on an exchange, since it taps into a wider user base.

Regulations are probably the biggest problem for Coinbase. It was recently forced to send customer info and trading histories to government authorities, spooking some traders. OKEx and Binance are regulated in different jurisdictions, with a less invasive and more comfortable environment for crypto traders. OKEx has seen its volume increase during 2018, with nearly USD 6 billion of trading volume in July 2018 versus less than USD 5 billion in January. Binance’s trading volume has dropped from USD 15 billion to just over USD 10 billion during the same time, not as severe as the drop from USD 20 billion to USD 3 billion per month for Coinbase.

Coinbase has gone from being one of the biggest crypto exchanges in the world by volume to having nearly the same volume as Kraken and Bitstamp, with many crypto exchanges outranking Coinbase. It has acquired Paradex in an effort to diversify and increase the number of currencies offered but has a long way to go to reach the 610 currencies that OKEx offers. Due to regulations, Coinbase might not ever be able to offer the same order of magnitude of options as exchanges like OKEx and Binance.

There has been a lot of news recently about the Bakkt cryptocurrency exchange, backed by the Intercontinental Exchange (ICE) which owns the New York Stock Exchange (NYSE). With Coinbase trading volume declining so sharply, Bakkt appears to be in a prime position to become the leading crypto exchange in the United States when it launches later in 2018.

 

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