LocalBitcoins Weekly Volume Drops to Lowest Level Since 2013

LocalBitcoins is considered to be a staple of the cryptocurrency industry. Started in 2013, it has often been a popular place for OTC trading. Since 2017, however, its weekly trading volume has steadily declined.

A Worrying Trend

Looking at the weekly volume for LocalBitcoins, it does seem like its best days are behind us. For the week of Feb. 22, the OTC trading platform had just 3,144 BTC. We haven’t seen numbers this low since May 2013, which is the year LocalBitcoins was first introduced. The trend is captured below, courtesy of Coin Dance. The reason for the persistent decline could be due to increased competition. Not only do other services, like Paxful, also offer OTC trading, but LocalBitcoins angered many of its users when it introduced KYC requirements for smaller traders last year. This was strengthened in EU jurisdictions in March 2019, as BeInCrypto reported then. Although we saw a spike of trading volume in early 2019, this has since fizzled out and the downtrend has since only grown steeper. It seems that the institution of KYC requirements really hampered the platform’s success. The downtrend has also been global. For example, BTC volume on LocalBitcoins in China now stands at a two-year low. Other major countries report similar downtrends. Therefore, it’s safe to say that that LocalBitcoins’s best times may be over.

What the Future Holds

Although LocalBitcoins is losing relevance globally, it still remains a popular destination for countries with few alternatives. For example, there’s a strong link between countries with troubled economies and higher Bitcoin trading volumes. Argentina, for example, posted its highest-ever LocalBitcoins trading volume in December 2019 after foreign currency controls were instituted in the country. Venezuela broke similar records just last month.  So, does this mean that LocalBitcoins is doomed to irrelevance? It seems that it will be able to maintain its niche in the OTC Bitcoin marketplace. However, the dominance it once enjoyed seems to be behind us as competitors step up to the plate. With exchanges offering their own services, LocalBitcoins feels archaic in light of more attractive alternatives for traders.