During 2017, the cryptography market recorded an upward trend that allowed Bitcoin, cryptocurrency and blockchain technology to grow at very high rates. However, the market has undergone a very severe correction that has pushed down the prices of encryption. Bitcoin (BTC), for example, fell more than 80% while other digital assets recorded higher losses.
The cryptocurrency exchanges have been damaged by this bear market also. The market becomes much more competitive and profits are not as big as at the start of 2018, when the market was still close to its historical highs.
According to the Blockchain Transparency Institute (ITV), there are only four cryptographic exchanges that have more than 100,000 active users every day. These exchanges are Coinbase Binance, OKEx and Huobi.
Our new ranking is out with the mobile app and API metrics! @binance remains high while @Bitstamp, @coinbase is @krakenfx move respectively 33, 19 and 23 points from the CMC ranking in the Top 10. See the complete list https://t.co/6kEOmoBYOw pic.twitter.com/62iWvD1swI
– Blockchain Transparency Institute (@BTI___) 2 November 2018
However, the situation in December 2018 did not improve. On the contrary, it got worse. Only two cryptographic exchanges had 100,000 active or more users, Coinbase and Binance.
This situation is having serious repercussions on cryptocurrency platforms. It could this bear market bring bankruptcy into some bags? It may be possible to see this happen if the market does not see a clear tendency to roll over and the number of users continues to decline.
In this report published by BTI, Coinbase had a transaction volume per user of $ 371 while Bitfinex $ 2,841. This demonstrates that there are several exchanges of cryptocurrency based on the needs of customers and users. Coinbase appears to be used for very small transactions while Bitfinex shows that they manage investors with larger portfolios.
According to Evan Feng, founder and CIO of Tapestry Capital He says cryptocurrency exchanges will eventually consolidate in the future.
"The older ones will get bigger and the smaller ones will go out of business, and it's natural for these markets to become more efficient," said Feng.
There are several sectors of the crypto industry that are moving towards the centralization of economic activities. Something similar happened with the mining industry where only a few companies control the market.
There are also several countries that are starting to take more stringent regulatory measures against trade. The intention is to reduce risks and make sure that taxes are paid. For example, Kraken said he received 300% more requests in 2018 than in 2017. This is why the exchange said that there are several companies around the world that prefer to block US users.
This would have a profound impact on industry in the United States. As entry barriers are higher, the industry is expected to move in the same direction and the differences between new and old platforms will increase.
Countries like Denmark or Bulgaria are also investigating encrypted users who exchange digital resources on various platforms. It may be possible to see countries that prohibit users from using other platforms abroad rather than local platforms. This is where decentralized trade (DEX) could be a useful tool for people who have been affected by these regulations. DEXs do not require the user to provide private information, but they tend to be less user-friendly than centralized exchanges.
Exchanges and platforms must be prepared for the future and in full bear market. However, this does not mean that they will be in danger or that they should close.