Low Volatility Hurts Trading Volumes

In a recent appearance on the Crypto Trader show, Binance CEO Changpeng Zhao said the exchange is seeing a 90% decrease in trading volume compared to January of this year. The exchange is, however, still expanding its userbase, and remains a profitable business, according to Zhao.

“We are still signing up a steady amount of new users every day, so from what we’re seeing, it’s very healthy, actually”.

In the last 24 hours, Binance handled $589 million worth of trades, making it the third busiest cryptocurrency exchange.

Binance spends 20% of its profits each quarter to buy Binance Coin (BNB) tokens on the exchange and burns them in order to increase scarcity. We can see the decline in trading volume reflected in the amount Binance spends each quarter for their BNB burns – Binance burned approximately $30 million worth of BNB in April 15, about the same amount in July, while they spent $17 million for their latest token burn in October.

In the interview, “CZ” also pointed out that the amount of user BTC Binance is holding in their cold wallets is steadily increasing.

As for why volume has been dropping particularly hard in recent months, Zhao offers a simple explanation, saying that the cryptocurrency market’s low volatility is making it less attractive for traders.

What Will Be the Catalyst for the Next Bull Run?

Interestingly, news of major institutions such as Intercontinental Exchange (Bakkt) and Fidelity getting involved in the cryptocurrency space hasn’t really been able to wake up the cryptocurrency market.

Crypto Trader host Ran Neu-Ner asked Zhao about what he believes will be the catalyst that triggers the next bull run in the cryptocurrency market. On this point, “CZ” didn’t provide a prediction, but seemed very confident that the market is due for another run sooner on later. He also explained that predicting what will catalyze the next big move in the fast-moving crypto market is extremely difficult, and used the ICO boom as an example:

“If you asked me two years ago what would be the killer app, I would not be able to say ICOs. So, the ICO market has cooled off a bit, which I think is very healthy, because it was too easy to raise money through ICOs. I think projects should spend a little bit of effort to raise money.”

While Binance is one of the most popular cryptocurrency exchanges for retail traders, Binance is ramping up its institutional-grade services, outlining their efforts to create a better platform for institutional investors in a recent blog post.