Behind the Scenes of the Cryptocurrency Exchange: Secrets, Strategies, and More

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Cryptocurrency Trading Demographics

The USA, Japan and China are the main cryptocurrency markets. The average trader is a man aged 20 to 30 years, and women and representatives of other age groups also enter the market.

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  • OKEX: “30% of all Koreans trade cryptocurrency.”
  • Huobi: 70% of customers come from China, many from Japan, much less from the USA. About 50% are 30-50 years old, and the average Chinese investor is 20-30 years old. “The ratio of men to women among customers 4 months ago was 4: 1. Now it’s 3.3: 1. So women’s participation is growing very fast. ‘
  • Kraken: The users of the Kraken exchange are mostly men, with a recent influx, their number has replenished both very young (18 years old with small amounts of money), and those who are already about 70 years old. Average age: 35 years or more, technically savvy people with little money to invest. “Recently, representatives of both extreme groups have come to us, both teenagers and those over 70.”
  • Binance: “We are in 270th place in the world according to Alexa and 70th in the USA. “The USA is our largest market, the average age of customers is 25-35 years old, mostly men.” Mostly middle-aged people, 50-60 years old, “although even grandmothers talk about cryptocurrencies” are still not interested in cryptocurrency.
  • Quoine: People over the age of 20 come in droves. “When I started … they were just looking for new entertainment.” “Crypto is more profitable than Forex and other assets” – Japanese investors are interested in margin trading.

The Importance of Cryptocurrency Exchange Security

People need to make sure that the exchange they use pays due attention to security, since exchanges have always been the target of attacks.

In addition, users should stop publishing information about their cryptocurrency investments on social networks.

Advice

  • Kraken: “Security is what we constantly think about … this issue is at the heart of the exchange … it was he who inspired us to create the exchange, Powell says. This is a marathon, not a race … we saw how many prominent participants lost their mobile phones, even abducted some people. ‘ Further, Powell continues to warn traders about personal safety: “You should think twice before talking about Bitcoin on social networks.”
  • Binance: “When you grow too fast, you lose vigilance … You need to find a compromise between the convenience and safety of the client.” Lin makes it clear that some exchanges do not apply precautionary security measures in practice. Even in Japan with its regulated market, troubles still occur. That’s why “everyone should make sure that the service providers they use put their safety first.”

The effect of whales on the cryptocurrency market

Market leaders tend to agree that there are so-called medium to large sized whales that influence the cryptocurrency market.

Nevertheless, while there are no mechanisms that would provide complete control over the market. Investors should beware of coins with low liquidity, as they are easy to manipulate.

 Expert Opinions

  • Kraken: “Without a doubt, there are whales that control the market … but I would not say that someone has a significant impact on the price.”
  • Binance: “I would say that whales exist, but they do not necessarily have evil intentions. Some whales prefer to play, while others arbitrate. ” Lin further explains that in less liquid currencies such as Ripple (60% of which are in the same hands), whales can even control the market through arbitrage. Ultimately, Lin believes, manipulation is not widespread.
  • Huobi: Whales affect “70% of Bitcoin’s position.’

How the exchange selects the coins that are represented on it

  • OKEX: The company is looking at technology and market size, as well as whether there is a limit to growth in this market. They check whether the token in question is utilitarian, and also look at the risks, security and characteristics of the technologies underlying it. Lee says adding a new coin takes from a few weeks to a month.
  • Huobi: Huobi uses a system called “smart chain” based on five criteria. These include strategy, management team, technology, market size and potential. However, “we don’t disclose just how we measure these elements … we don’t want the bad guys to use this information.”
  • Binance: People ask me: “What coins are you going to add next? It has become a kind of entertainment: jumping on the next interesting thing. ‘ Lin says there are only a few ways to figure out if you have the right project. “As for us, we use a purely proprietary methodology. Is the team good, do they have a good reputation, do they have a finished product … And do they really use blockchain technology? ”He further says that they like modest teams that don’t crave extravagant sums of money. “We miss less than 3% of all applicants … 97% are rejected,” Lin said.

Trends

Bitcoin is still the preferred coin to trade, but altcoins are gaining momentum. There are also many entrepreneurs trying to reach out to the masses by launching ICOs.

Expert Opinions

  • Huobi: According to our observations, people used to trade a lot more. Now we see that people are mainly trying to hold on to cryptocurrency.
  • Quoine: Bitcoin is still the most popular coin. Its popularity is due in part to the fact that this is the largest token in terms of volume, as well as the fact that the Japanese government recognized cryptocurrency as a legal payment method.
  • Binance: Japan is more focused on bitcoin, while the altcoin market is very small. This is due to government regulations, since any coins must first be approved by the government.

The future of cryptocurrency trading

Although the cryptocurrency market still resembles the wild west, it is expected that the number of market manipulations will decrease. Countries should take measures to regulate it in order to control these manipulations.

Expert opinion
Quoine: As the market becomes more mature, manipulation will shrink. After some time, when there are more institutional and retail investors, the market will become mature, and exchanges will have to become more transparent in terms of who controls the movements of the market and who buys what.

Psychology of cryptocurrency trading

People should do a more thorough study of the coins instead of just investing, looking at the value or what the news says.

Expert Opinions

Kraken: Powell says: “It gets scary when you hear about some of these strategies.” He believes that news manipulates the behavior of traders and believes that it is dangerous to invest in tokens only because their value is less than one cent.
Binance: New users often look for coins with large price fluctuations, considering them more interesting and potentially profitable.

Thoughts in the end

As the world of cryptocurrencies evolves in terms of user acceptance and government regulation, cryptocurrency exchanges will be forced to adapt to new conditions.
Many exchanges make large strategic bets on the direction in which they think the industry will go.
Managing a cryptocurrency exchange requires the gift of foresight at almost the oracle level, mixed with the ability to manage a startup in an extremely fast-paced and competitive environment.

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