Bitcoin trading volume is sliding for the second day since the transaction fees were introduced by the major Chinese bitcoin exchanges. The fees are the result of increasing government attention to the bitcoin market, that forced the exchanges to curb speculative trading in attempt reduce the chance of strict regulation of the bitcoin market. The volume started sliding on January 24, when the exchanges started charging fees. The slide continued through January 25 and 26. The volume dropped by more than 90% since the transaction fees were introduced. Coindesk.com reports:
Bitcoin trading volume continued to slide on 26th January, as market sentiment showed signs it has yet to fully brush off the impact of new policies at major China-based exchanges.
Overall trading volume has declined substantially in the days since OKCoin, BTCC and Huobi began charging trading fees on 24th January, and there are signs that these exchanges are acknowledging what could be a continued issue …
He went so far as to claim that some market participants are beginning to look to other assets for improved returns … (Read the full article)
The chart below shows the drop in the transaction volume on OKcoin, one of the major Chinese exchanges (the following charts are courtesy of Coindesk):
The volume of bitcoin transactions on the exchanges outside China also dropped.
The positive effect is that despite the drop in volume the price of bitcoin remaind high.
Analysts indicated that the decline may have been bigger than expected, a concern that is also contributing to depressed sentiment.
Petar Zivkovski, COO of leveraged bitcoin trading platform Whaleclub, spoke to this situation: “This has surprised many in the industry as the ‘real’ demand for bitcoin trading in China is much lower than what people expected,” he said.
Yet, while several analysts emphasized the key role played by market sentiment, some pointed to the calendar as the chief contributor for the slump.
The Chinese New Year is only a few days away, noted Arthur Hayes, and as a result, “volumes are declining rapidly.”