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Crypto trading volumes are dropping

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crypto trading

Volumes in crypto market are dropping, indicating an alarming situation. Crypto market started this year on a good note but later on crashed to low levels, apart from Ethereum, all other major crypto currencies are down for 2018, but one of the most alarming situations in this matter is that trading volumes on different exchanges are dropping to lowest levels in recent months.

For example, on Bitfinex current trading volume of Bitcoin is at around 25000 which at one point of time was as high as 160000 , which means this volume is not even 20% of its peak volume. Similarly in the case of Ripple, current trading volume is 8 Million which at one point of time was 50 million, so there is an alarming situation in that regards because not only price is dropping but crypto trading volume is also dropping dramatically.

Lack of interest?

One of the key questions that analysts are asking these days is that, is it lack of interest from investors that volumes are so low? may be they have found new investment opportunity in the form of S&P 500 and Gold. Most of the analyst think that this low activity is due to the reason that market speculators are currently out of the market and in wait and watch situation to make an entry point.

Calm before the storm?

Such low volumes and price movement in a tight range suggest that this is the calm before the storm, many regulatory authorities around the world are trying to stop crypto trading by either putting complete ban or by introducing tight laws, so speculators and institutional investors are just waiting for a clear picture so that they can make their bet on it, but one thing is for sure that sooner or later market is due for heavy movement in either direction, so day traders need to watch out.

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Australian Taxation Office warned against crypto retirement funds

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Regulatory authorities around the world have tighten the grip on crypto projects. Taxation authorities like Internal Revenue Service (IRS) and Australian Taxation Office (ATO) are the latest to join the list with strong initiatives.

Australian Taxation Office recently sent warning letters to the investors who have invested a large part of their retirement savings in crypto related funds. ATO sent these letters in order to warn investors against high risk investments like crypto. One of the key responsibilities of regulatory authorities and taxation authorities is to keep investors away from high risk investment schemes.

A spokesman from ATO told local media that “We have already seen instances in 2018 where investors lost significant amount of their retirement fund in crypto investments, so it’s our duty to make them aware about the kind of risk crypto market posses”. The spokesman further explained that they are also against the huge exposure in any single asset class. “We are not saying that we are all and all against the crypto market or crypto assets, but we are more concerned about the kind of exposure these crypto retirement funds have in single crypto asset like Bitcoin”

“If an investor is putting more than 90% of his retirement savings in crypto then obviously it is at high risk and that’s what we discourage, we have no issues in diversified portfolios but if crypto retirement funds are having 100% exposure in crypto assets then we have to warn investors about the potential losses.

Self-Managed-Super Funds (SMSFs)

SMSFs are type of retirement accounts privately managed by individuals rather than the institutions or regulated financial companies. Australian Securities and Investments Commission also supports ATO’s decision, in a recent statement ASIC said

“Be wary of services offering to establish an SMSF for you in order to gain exposure to cryptocurrencies. Not only does operating an SMSF involve significant time, skills and responsibility, you may also be putting your retirement savings at risk”

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Morning Crypto Roundup: Coinbase, Bakkt, Binance in news

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“Coinbase seeing $200-400 million in new crypto deposits every week”: Armstrong 

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CEO of Coinbase, Brian Armstrong says that “Adoption of crypto by Institutions is no more an uncertainty. The question was valid about 12 months ago, but now everything has changed as we’re seeing $200-400 million a week in new crypto deposits from institutional clients”

In a recent tweet, Armstrong further says that trust and safety means a lot to crypto investors and Coinbase is on a mission to provide safe infrastructure to institutional clients in order to increase adoption.

Coinbase has completed acquisition of Xapo which helped them in institutional business. In a recent blogpost, Coinbase further mentioned that in just one year of launch, Coinbase custody has reached a staggering number of $7 billion of assets under custody, stored on behalf of 120 clients from 14 different countries.

The highlight of today’s tweet from Brian Armstrong was the numbers from Institutional investors. Safety have always been a big issue for investors and that’s why there were lot of discussions regarding adoption of crypto at Institutional level, but with $200 – 400 million coming into Coinbase every week, we can easily say that crypto adoption at institutional level is no more a question, it’s a reality.

The way forward 

We already discussed about the importance of safety of funds in crypto market, but in order to increase adoption, crypto market must create new traders. Traders love leverage, borrowing and lending which allows them to trade the market even with limited resources. Retail forex market is a prime example of such facilities. Coinbase did mentioned in the blogpost that they are excited to explore new ways to monetize and leverage crypto assets like borrowing and lending.

Bitcoin ETF

Decision about the Bitcoin ETF by securities and exchange commission is pending in October. Exchange traded fund approval from SEC can open new doors for crypto adoption at an institutional level.

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