Today morning once again Bitcoin price touched a new yearly low which led the crypto investors and traders to find the answer of the crypto market downtrend. According to a research conducted by CryptoCompare, Bithumb the South Korean cryptocurrency exchange may have contributed to this most recent sell-off. Bithumb is not the only reason behind the decline in the price of Bitcoin (BTC), there are many other pressures on the top cryptocurrency which are contributing in this downturn.
According to the latest CryptoCompare’s Aggregate Pricing Index (CCCACG), in October and November Bithumb led all cryptocurrency exchanges in daily volume. The average daily volume for the cryptocurrency exchange for this period was $1.24 billion which represents a parabolic month-over-month increase of 284%. Even in the same phase the global crypto exchange Binance reported a 34% decline in the volume. As the volume of Bithumb was not entirely organic that is why most of the data aggregators still consider Binance as world’s highest volume crypto exchange. The increase in Bithumb’s trading volume is correlated with numerous promotional campaigns including Super Airdrop Festival and Special Gift. These promotional offers enable Bithumb to raise its daily volume. A recent report states that
“Bithumb saw a 284% increase in volumes from the previous average of 323 million USD for the Sept/Oct period. This increase in volumes follows after Singapore-based BK Global Consortium bought a controlling share in the exchange in recent months, and later implemented a series of airdrop competitions, raffles, rebates, and other programs designed to incentivize non-Korean users to sign up to the exchange and trade in exchange for rewards. They have also implemented a potential form of trans-fee mining for certain users, where trading beyond a specific volume is rewarded in the form of “Bithumb Cash” at a later date.”
If we believe the history, trading volumes are directly proportional to the price which means when the trading volumes are high the price of Bitcoin should increase. The fact is that Bithumb and several other lesser known crypto exchanges managed to increase their daily turnover despite decreasing active user base which indicates that these exchanges helped the BTC price remain above $6,000 for longer than what fundamental and technical factors suggest.