Centralized trading platforms play a crucial role in the cryptocurrency industry. A lot of users store their funds there for a wide variety of reasons. Recent research by TokenAnalyst confirms things are slowly changing. A lot of big exchanges see less of an influx of Bitcoin, forcing them to tap into other revenue streams.
The Trading and Exchange “Dip”
It is always important to put data in its proper context. The information provided by TokenAnalyst does not come as too big of a surprise. Late 2017, all of 2018, and early 2019 have been brutal for the crypto industry. As such, there is a steep decline in unique addresses sending Bitcoin and altcoins to the world’s leading trading platforms. While some may see this as a problem, it is actually a good thing.
While this is not good news for the exchanges in question, it shows crypto trading is evolving. More and more people are less keen to dump funds on exchanges for safekeeping or other purposes. Cryptocurrency allows users to control their finances at every moment. Sending funds to an exchange erodes that feature completely. One could also argue the lack of retail interest in cryptocurrency has become a lot more apparent. That isn’t necessarily a bad thing either.
USD Trading Volumes Decline
Virtually all cryptocurrency prices are depicted in their US Dollar value. It doesn’t matter where the end user is based, all they care about are the dollar signs. In that regard, it is a bit odd to see a major decline in US Dollar trading. Although the extended crypto winter can also be blamed for this trend, it is evident that the tides are turning. A lack of fresh fiat capital could keep all cryptocurrency prices subdued for the foreseeable future.
Another valid argument is how the trading of stablecoins has seen a major increase. Rather than trading US Dollars directly, exchange users flock to the likes of USDT, TUSD, and USDC. Binance’s upcoming BUSD will only erode the demand for US Dollars even further. Even though users are still trading based on the USD value of their portfolio, they do not get involved with dollars directly. An interesting trend well worth keeping an eye on over the years to come.
Exploring new Revenue Streams
For the trading platforms affected by these changes, new solutions need to be found. If the trading of cryptocurrencies is no longer as profitable as before, one has to begin offering new services altogether. This shift has become apparent in recent months. Various platforms now allow for margin trading. Some offer much higher limits compared to others, which can attract a lot of people over time.
As far as other services to be provided, it remains a bit unclear what the next move will be. Binance’s blockchain division will undoubtedly continue to work on new projects For Bitfinex, Coinbase, and other similar platforms, the evolution of their business model may require drastic changes. Only time will tell if that is for the better.