High Volatility Turns Coinbase Customers To Trade Altcoins Instead Of BTC, Company Research Says

Vigorous volatility levels push Coinbase users to trade more altcoins instead of Bitcoin, new research by the company says. It also outlines that less than a quarter of Bitcoin investors on the exchange stick with the asset, as the majority turn to alternative coins at some point.

Altcoin Trading Volumes Rise During High Volatility

In this week’s paper, the veteran US-based exchange examines how its customers are behaving in times of increased volatility charts. It concluded that despite Bitcoin being the most traded cryptocurrency, when severe price fluctuations occur, most users prefer trading alternative coins.

Coinbase Trading Levels BTCvsAltcoins. Source Coinbase

The research informed that this trend began in late 2017 when Ethereum briefly challenged Bitcoin’s dominance over the market. Although the primary cryptocurrency has proven its dominance since then, the trend is evident even now “in large spikes.”

In late 2019, the most traded altcoins were Tezos, Chainlink, BAT, 0x, and Stellar, while in early 2020, Coinbase customers turned to Ethereum, Chainlink, and Tezos.

“This increasing drive is in part due to Coinbase’s continued addition of new assets, but a deeper cut shows that price volatility significantly swings customer behavior toward non-BTC assets.” – the report reads.

When comparing the volume on Coinbase with the total market capitalization of each asset, the research says that “customers trade non-BTC assets at a ~3% higher rate than their relative market caps would suggest.”

BTCvsAltcoins Trading Volume Compared To Market Cap. Source: Coinbase
BTCvsAltcoins Trading Volume Compared To Market Cap. Source: Coinbase

Fewer Investors Stick With Bitcoin

The paper also informs that 60% of Coinbase customers with at least five purchases are buying Bitcoin initially. However, only 24% tent to stick exclusively to the largest cryptocurrency by market cap. Therefore, 76% in total buy other assets either as their first investment or later as a trade against BTC.

Coinbase Customers Cryptocurrency Purchases. Source: Coinbase
Coinbase Customers Cryptocurrency Purchases. Source: Coinbase

“Bitcoin is carrying the flag for the entire cryptocurrency space, and we should embrace it. But the retail preference to branch into other assets shows that new users come to crypto through Bitcoin, but generally begin to look for alternative assets and use-cases. In this sense, Bitcoin is also top of the funnel for broader crypto growth.” – adds the research.

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