Many top Bitcoin exchanges have seen an influx of new users since the coronavirus lockdown started.
Five exchanges saw a notable increase in both signups, and trading volume—with some citing a doubling, or in some cases, a tripling of their usual rate of new signups. These exchanges are: Kraken, OKex, Bitfinex, Paxful, and Luno.
Bitcoin exchange Kraken saw an uptick in new users this month. Image: Shutterstock.
Kraken recorded an 83% rise in signups, and a further 300% increase in intermediate verifications—those who went through the KYC process to be able to deposit fiat money instantly.
Kraken’s Bitcoin strategist Pierre Rochard said that it might not be people bored in lockdown, it could be a move away from the legacy financial system.
“With Western governments struggling to contain COVID-19 and forcing cities and nations into blanket quarantines, individuals feel an urgent need to get out of the centralized financial system,” Rochard explained to Decrypt. “They can’t go protest in the streets, so they protest with Bitcoin.”
Similarly, peer-to-peer crypto exchange Paxful saw a 100% increase in new signups since the start of March. Bitcoin exchange Luno too, has seen a 50% uptick in active users over the last four weeks.
Marcus Swanepoel, CEO of Luno, told Decrypt, “While the current pandemic has created a lot of uncertainty across most, if not all industries, it’s reassuring to see that there remains confidence in cryptocurrencies, with many traders unwavered,”
As more and more people started to work from home, Bitcoin exchange Bitfinex saw a notable uptick in new users. “Our data shows that within the second half of March, which is when strict lockdown policies have been imposed in many countries, we’ve seen a 30% increase in new accounts,” a Bitfinex spokesperson told Decrypt.
Around the same time, Bitcoin exchange OKEx noted a slight increase in new users. Lennix Lai, OKEx’s director of financial Markets, pointed out that it wasn’t just the coronavirus that has impacted the exchanges, but the falling crypto prices too.
This can be seen in the data.
The exchanges are bleeding Bitcoin
While traders have been flocking to Bitcoin exchanges, the money has been going in the other direction. According to market intelligence firm Glassnode, the amount of Bitcoin being withdrawn from exchanges is steadily increasing.
“According to our labels, $BTC exchange balances are the lowest they’ve been in 8 months,” Glassnode tweeted, on March 26.
This movement of funds away from exchanges has affected trading volume. While Bitcoin’s volume peaked on March 13, at $74 billion, it has been steadily decreasing since then. Yesterday, volumes fell to a low this month, at $28 billion—down 20% since the start of March.
This has impacted the bottom line for some of these Bitcoin exchanges. While Paxful saw an increase in new signups, it reported a 10% drop in revenue.
With the increased volatility, traders seem to be seeking safety in stablecoins. Data from Viewbase shows that $223 million of the stablecoin Tether has flowed to exchanges in the last seven days, as a result of increased demand.
So, for now, the dollar is in vogue. But for how long?