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Crypto Exchanges: Insights Report 2018

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Cryptocurrency exchanges like the rest of the crypto ecosystem have seen their fair share of ups and downs over the past few months. 2017 seemed like a race for exchanges to keep up with new registrations, new cryptocurrencies, increased transaction loads and of course their own growth. It goes without saying that a bull market will inherently drive more traffic to the exchanges.

New users often found themselves waiting for days on end for their accounts to be approved (wherever that was necessary), and whenever new coins were introduced in exchanges it wasn’t uncommon for many to disable new signups altogether (Bittrex, Binance). 

 

What Fuelled the Rally in December?

In the last month of 2017, the market cap rose by a staggering 30% and many small coins saw a 100% or more increase in their value. All of these factors created an overall hype and there were even cases of accounts being sold on eBay and secondary markets. The day that Binance (Jan. 9) re-opened an additional 240,000 users signed up.

However, besides this information not much is publically available and aggregated in a way that can provide a true insight into the exchange market dynamics.

The following data aims to provide an overview of what really happened during the end of 2017 in cryptocurrency exchanges and set a foundation for comparison with early 2018.

Initially, we will take a brief look at the traffic analytics for some of the largest cryptocurrency exchanges. Below you can find the estimated traffic and unique visitors (including their growth percentage compared to previous months) as well as the average duration of these visits and the average number of pages that each user viewed per visit. This data is an estimate based on data from various sources, using proxies where necessary and other proprietary tools.

Table 1 – Estimated web traffic and analytics on 13 major exchanges based on average data from Nov 2017 to Jan 2018

  • As many would expect, Coinbase is the leading exchange in monthly visits. Coinbase is the go-to exchange for most entry-level users to acquire Bitcoin, Ethereum, and Litecoin using USD or EURO, both by credit card or Bank transfer. It offers an easy to use, mobile app and the payment methods provided are preferred by many new traders as well as those looking for a quick way to get funds on other exchanges and trade for new altcoins.
  • Coinbase’s exchange, Gdax, which actually provides markets for exchanges between BTC, ETH, LTC, BCH and fiat currencies is fourth on the list. These two exchanges combined, account for more than twice as much traffic as the second exchange on the list (Bittrex).
  • Fastest Grower: Binance grew a whopping 603% in visits, generating a demand for its token and an increase in price in many coins only listed on its exchange. It should not come as a surprise if it manages to supersede many other exchanges that have made little to no effort in improving their user experience and usability. The number of cryptocurrencies offered in Binance and the market variety also leads users to spend more time on the platform and visit more pages.
  • Bittrex is still the largest exchange of its type, offering more than 190 different cryptocurrencies and with a very high number of monthly visits.

 

Exchange Audience Analysis

Different exchanges appeal to different audiences. There are several factors to consider when analyzing the user demographics of each exchange. Some exchanges are only available in certain countries, while others make it easier to deposit or withdraw currencies from specific territories. The registration requirements (ability to get approved), fees and account approval period are also determining factors in the final selection of an exchange.

Of course, most traders that opt to trade more than just Bitcoin and Ethereum are probably registered in more than one exchange. It is also safe to say that a large number of users registered in an exchange that offers altcoin trading are also registered on Coinbase for reasons mentioned above.   

More than 60% of Coinbase and Gdax traffic is based on each other’s referrals (meaning users go from Coinbase to GDAX and vice versa so the effective traffic is 40% of the indicated numbers (Table 1).

Country by Country Analysis

Taking a look at the popularity of each exchange in different countries could provide some useful insight into the exchange market. The information presented below is based on both public and private information derived from proprietary tools and used to estimate the analytics of each website. There was a minimal lack of real active data from countries including China, Russia, Turkey, Korea, and Japan (yahoo). Users that connect to exchanges through a VPN connection could have an effect on the accuracy of this data.

Table 2 – Exchanges Visits by Country

  • Predominantly users in most exchanges are based in the United States of America. Coinbase and GDAX have a large user base in the United States, with Bithumb, Okex, and Huobi expectedly dominating in Asia. 
  • Best Global Distribution: Bitfinex has the healthiest distribution of users across the globe. Most of their users are based in the UK and US, however, when considering populations, the differences are reasonable. Poloniex also has a fairly even distribution of platform visitors although their base is more clearly defined within the US.
  • Interestingly, the Netherlands and Belgium have a high number of cryptocurrency exchange users, especially when taking into consideration their smaller populations (under 20 million).

Graph 1 – BTC volume by FIAT Currency

  • USD is the predominant fiat currency traded for BTC as seen on Graph 1.
  • The Chinese Yuan had a large trading volume, second to the dollar up until September ’17, during which all cryptocurrency exchanges were banned in China.

What is the profile of the average user?

At least 50% of all users have some sort of graduate or college education. With the 24-44 age group being the most active user group.

The average user spends 10 minutes on apps that only trade the major coins (Bitcoin, Ethereum, Bitcoin Cash, Litecoin etc). Examples of these apps include Coinbase and Gdax and up to triple the amount of time (28 minutes maximum average on Bitttrex) on exchanges with multiple cryptocurrencies (see Table 1).

Excluding outliers, users come back to the exchanges an average of 7-12 times a month depending on the exchange and an average of 4-15 coins are viewed per visit.

 

Access to Bitcoin and Altcoins Growing Globally

Due to the rapid growth of exchanges globally during 2017, access to Bitcoin and other cryptocurrencies has been facilitated. Coinbase is amongst the top 250 websites in the world.

More and more people have been trying to find out about Bitcoin, especially when its price is quickly rising or falling and media draws attention to it. The percentage of searches for Bitcoin on Google peaked in the first days of 2018 then fell below the 50% of average searches. Interest at the moment is at the same levels as it was in November 2017. 

Graph 2 – Google Searches Trends for Bitcoin

 

How is the Community Evolving?

Reddit, not twitter is the number one referral website for exchanges. Reddit appears to be the first stop for a high number of visitors on most exchanges.

Strangely enough, less than 20% of all traders actually look at blockchaininfo data before or after an exchange. This could be interpreted as an overwhelming amount of investments made a without fundamental analysis of the actual coins.

It will be interesting to compare the data presented above with data that will sum up the exchange market during January and February ’18 given the large fall in cryptocurrency values at this time.