Lately, the analysts noted a decline in cryptocurrency trading and made interesting statements about the unresolved legal situation of Bitcoin.
While Tom Lee sees a possibility that the Bitcoin price will reach $ 20,000 by the end of the year, the trading volume on Coinbase may indicate a different outcome.
One of the largest crypto exchanges in North America has seen a sharp drop in cryptocurrency trading since January 2018. A situation which matches the decline in Google search queries on bitcoin. On the other hand, the results provide captivating insights into the legal status of the cryptocurrency.
Regulation = Trading volume
As Diar notes, using data from CoinApi, the decline in trading volume on CoinBase is well over 83 percent. Furthermore, Bitstamp also has to cope with a relatively sharp decline – with 73 percent less trading volume in comparison with January 2018.
The Luxembourg-based crypto exchange also has to battle with the current bear market.
Binance also recorded a decline equal with about one third.
The surprise, however, comes from an unexpected side. The Hong Kong crypto exchange OKEX recorded an all-time high in trading in July; when the trading volume has increased by one-sixth since January.
Diar establishes a clear link between regulation and trading volume.
Traded volumes on Coinbase, Bitstamp and Kraken have seen steep declines. Meanwhile, token exchanges outside the US, that have lax regulator scrutiny, are now seeing an increase in traded volume with the majors.” said Diar hinting that this situation is driven mostly by regulations.
The most important suggestion is that while the rising level of regulation seems to be shying away from the mass of smaller traders, the report says, this is exactly what institutional investors are waiting for.
“However, the lack of a clearly defined regulatory framework around Bitcoin, ironically, could continue to pose a disadvantage for the cryptocurrency. Businesses will likely remain unwilling to take on the risk of regulators digging through their affairs after a near-decade of media focus on illicit activities revolving around Bitcoin.”
Ultimately, it is the unresolved legal situation that still holds back wider acceptance of cryptocurrencies. And in the end, it also needs it so bitcoin could liberate itself from its current label as a speculative object.