12% drop of Bitcoin trading volume on LocalBitcoins after Apr. 1 price jump. Why

[GabrielleGGG]

Make a guess, how much did Bitcoin volume on LocalBitcoins increase after the Bitcoin jump on Apr. 1?

A hint: in Binance, BTC/USDT volume more than doubled up in the following week.

Well, the answer is a staggering -12%.

Yes, you didn't see it wrong. The Bitcoin volume on LocalBitcoins decreases by 12% compared to previous week following the price jump.


How and why there is such a difference? You might got your own answer after reading an article on Medium:

https://medium.com/sophonexchange/the-bitcoin-retail-market-21e1f9790a80?source=friends_link&sk=2d0bd37e708a8ab9090413f6af3b9939

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[OgNasty]

My guess is that it's related to them recently cracking down on KYC requirements.

LocalBitcoins to Do Away with Anonymity to Comply with Financial Regulations

[jseverson]

Interesting take. So basically, the trading volume is "pegged" to a fiat value rather than Bitcoin value. People spend the same amount of money for trading, it's just that Bitcoin became more expensive.

I'm not sure about their conclusion that trades from Localbitcoins are mostly used for practical purposes though. I find it more likely that their trading volume is less affected by price fluctuations because of the lack of options to trade BTC for alts. Basically, if you want to trade to make money, you use full-feature exchanges. If you just want to HODL and hoard quietly (which is still speculation), you can use Localbitcoins.

[avikz]

My guess is that it's related to them recently cracking down on KYC requirements.

LocalBitcoins to Do Away with Anonymity to Comply with Financial Regulations

I doubt this particular issue has impacted the volume of LBC because it is not a new thing for them to implement. KYC was always there in LBC and they used to force KYC as soon as a particular user reaches a certain volume! And the KYC free volume is very minuscule and takes very less time to achieve! So it has not affected the volume of LBC in any way.

I believe it's consumer psychology and nothing else. With the sudden rise of bitcoin price, it may be possible that a lot of sellers are not selling off their bitcoins with the hope that it will go up again and the reverse mentality is working for the buyers! Buyers just don't want to take further risk because they are unsure about the future outcome!

I am seeing that the price quoted by the buyers are not up to the mark and not in accordance with the market price. They are not ready to buy with a premium to keep their risk and exposure low, which led me to this conclusion.

[pooya87]

my guess is that it is because the volume on localbitcoins.com and most of the other P2P and more "off the market/exchanges" ways have been rising during the time when price was stable. by that time i explained this theory that a big whale accumulation off the market was going on where they wanted to buy at $3k but didn't want their buys to affect the price so they took their purchase to other places including LBC. now that price rise has begun and their accumulation has ended that volume has gone down. but also the rise itself always brings an additional volume so the total (decrease because of whales ending their accumulation + increase because of price rise) is a small one.

[Kakmakr]

My take on this is simple, LocalBitcoins are mostly people who buy bitcoins for long-term gain and not for daily trades and trading in and out of Alt coins. So with a rising price, people who accumulated coins during the low point has stopped buying more coins and this reflects on the 12% decline in the trading volume.

The Exchange volumes are still high, because Alt coin prices has increased with the Bitcoin price and the Alt coin trade volume increased as a result of that. 

[Haunebu]

My guess is that it's related to them recently cracking down on KYC requirements.

LocalBitcoins to Do Away with Anonymity to Comply with Financial Regulations

Wow. I didn't know about this. This must be the reason behind the drop. Have been using this site for a long time now and it has become my preferred way of buying and selling BTC.

The new restrictions by the government clearly imply that they are putting in more and more effort into regulating this market and abolishing the concept of anonymity in this market which seriously sucks in my honest opinion.

[buwaytress]

My take on this is simple, LocalBitcoins are mostly people who buy bitcoins for long-term gain and not for daily trades and trading in and out of Alt coins. So with a rising price, people who accumulated coins during the low point has stopped buying more coins and this reflects on the 12% decline in the trading volume.

The Exchange volumes are still high, because Alt coin prices has increased with the Bitcoin price and the Alt coin trade volume increased as a result of that. 

If I might add, I think most of the traders, at least in the EU and in 2 other countries I trade with, do this as a business. They're buying and selling as often as possible, just trying to make some regular profits off the difference in spreads (which gets a lot more interesting as Bitcoin price grows). Then you've got guys like me, who only sell! We earn in Bitcoin and we just make sell offers to get a better rate than at an exchange (or in my case, get instant deposits with some currencies).

I don't think there's any single reason, but I'm sure it's more to do with OgNasty's share on KYC.

[susila_bai]

My guess is that it's related to them recently cracking down on KYC requirements.

LocalBitcoins to Do Away with Anonymity to Comply with Financial Regulations

I agree with this point as most of the users were using localbitcoins exchange only for non KYC process and dealing directly to the users with their escrow facility. But after they implemented of KYC compulsory most of the users have stopped using localbitcoins as their charges are high comparing to exchanges so it is better to follow full KYC in exchange and use it better then giving KYC in localbitcoins.

[Ailmand]

My guess is that it's related to them recently cracking down on KYC requirements.

LocalBitcoins to Do Away with Anonymity to Comply with Financial Regulations

Wow. I didn't know about this. This must be the reason behind the drop. Have been using this site for a long time now and it has become my preferred way of buying and selling BTC.

The new restrictions by the government clearly imply that they are putting in more and more effort into regulating this market and abolishing the concept of anonymity in this market which seriously sucks in my honest opinion.

A good point, most people wants to be anonymous in crypto and doing KYC is bothersome and makes them feel unsecured, due to possible confidential information leak. One of the reasons why bitcoin is still far from mass adaptation is it's accessibility, in some cases it takes a lot of process for individual before he can use a  platform to access crypto. Maybe, that is one of the reasons qhy volume in LBC dropped.

[traderethereum]

The article said like this:

This is a strong indication that these trades were not for investment purpose, which mostly likely should increase dramatically.

And from that, I think the trader on the LB, wants to buy and sell in the exchanges.

My guess is that it's related to them recently cracking down on KYC requirements.

LocalBitcoins to Do Away with Anonymity to Comply with Financial Regulations

I agree with this point as most of the users were using localbitcoins exchange only for non KYC process and dealing directly to the users with their escrow facility. But after they implemented of KYC compulsory most of the users have stopped using localbitcoins as their charges are high comparing to exchanges so it is better to follow full KYC in exchange and use it better then giving KYC in localbitcoins.

I think if LB wants to apply the KYC, then it will reduce the adoption process because people want to use bitcoin because of the anonymous. Then it will make LB reduce its reputation in the crypto user because they need to fill KYC before they can use the services. I hope that LB will not apply the KYC so more people will come to the LB to buy bitcoin without filling KYC.

[kryptqnick]

Reasons for difference were stated by others already. But if you are talking about the change in volume from the first of April till now, to he fair we should mention that the volume has negative dynamics on coinmarketcap as well. I've been watching it for a while, and the volume pretty much doubled sling with the spike at the beginning of April and has been gradually decreasing since then. It went from $20 billion to $10 billion it two weeks, actually. It hasn't been a straight line leading down, but you can see this general tendency here: https://coinmarketcap.com/currencies/bitcoin/historical-data/.
 

[fiulpro]

What I think is people stopped selling their Bitcoins , as simple as that since the price is increasing everyone is just sitting there and waiting for the price to increase more.

Therefore this decrease in volume is a measurement of the selling orders getting lower , therefore it's not a measurement of things like people getting out of this thing therefore I think this can be taken as a good thing , we are getting more holders we may say.

Other than that I don't think there will be any negative variant to this situation.

[Beerwizzard]

My guess is that it's related to them recently cracking down on KYC requirements.

LocalBitcoins to Do Away with Anonymity to Comply with Financial Regulations

I remember that LBTC asked me to pass KYC somewhere at the end of 2017. Anyway, recent decrease is hardly related to KYC changes.
It is a pretty logical thing that when people were holding their coins for a long time and now finally got a chance to sell it for the better price they actually selling more coins than they were selling before. That's not really a volume decrease, that was only a spike and now we are getting back to normal numbers.

[stompix]

My guess is that it's related to them recently cracking down on KYC requirements.

LocalBitcoins to Do Away with Anonymity to Comply with Financial Regulations

I doubt this particular issue has impacted the volume of LBC because it is not a new thing for them to implement. KYC was always there in LBC and they used to force KYC as soon as a particular user reaches a certain volume! And the KYC free volume is very minuscule and takes very less time to achieve! So it has not affected the volume of LBC in any way.

Just a few days ago I've posted this:

LB is dead for me
Many of the users I've dealt with during the years have gone silent, the new ones offer prices with quite a heavy % on bitstamp, less and less banks for national transfers...Really not attractive anymore.

LB is losing sellers and buyers and the ones that are left are hiking the %.

If I might add, I think most of the traders, at least in the EU and in 2 other countries I trade with, do this as a business. They're buying and selling as often as possible, just trying to make some regular profits off the difference in spreads (which gets a lot more interesting as Bitcoin price grows). Then you've got guys like me, who only sell! We earn in Bitcoin and we just make sell offers to get a better rate than at an exchange (or in my case, get instant deposits with some currencies).

I don't think there's any single reason, but I'm sure it's more to do with OgNasty's share on KYC.

And this is another problem that me both might share as we live in the EU.
Authorities have started to look into it and have already taxed or are planning to tax profits made from trading.

For some that have made a lot of trades during the years and now they are faced with thousand in tax payments it's better to close their accounts and hope that if they stay quiet this year maybe the IRS (or what is called in other countries) won't notice them.

I have the phone number of two of my favorite traders, both haven't been active for at least 4 months on LB, one has told me he isn't dealing anymore, the other number is closed! (not out of reach, is closed down, terminated)

[Nadziratel]

I never use Localbitcoins and never need it.
I think it is opposite idea of decentralization. I think such platforms should definitely support the decentralized structure.

[klaaas]

With spikes people pull there sell orders and wait what the situation will do, It takes longer to get back to the old trading volume. Same with big dumps but then the buy orders will pull out.

[lyks15]

My guess it is because they implement a KYC system. More bitcoiner are afraid to give their personal information so many of bitcoiner did not transact and some who already buy bitcoin is still holding their bitcoin and hoping for the higher price value before to trade or to sell it so the bottomline is nothing will circulate because most of bitcoin still holding so bitcoin trading was drop 12%.

[dothebeats]

LBC is a dead platform after stricter KYC and AML compliance were put in place. Also, the liquidity in the said platform isn't the same as those from binance and the likes. People want action and want to be a part of it, and they simply can't get it on LBC that's why they moved into exchanges where they can participate on the run as it happens. Don't get me wrong, LBC is still a nice platform for P2P trades, but in the fast-paced world of cryptocurrencies, LBC is just an ancient relic that can't keep up and might die in the next few years or so.