How Crypto Exchanges Remain in Profit Irrespective of market downtrend

How Crypto Exchanges Remain in Profit Irrespective of market downtrend

The level of cryptocurrency awareness has increased a lot when compared to previous years. Some of the factors that have contributed to it include last year crypto bubble, government awareness programs on the high risk of investing in it, wider private firms participation and interest of schools to run classes in it.

One of the key element that could not be sidelined in this crypto market is crypto exchanges. According to a Bloomberg report, it was recorded that cryptocurrency exchanges that are among the top 10 with respect to information available on cryptocurrency monitoring site ‘Coinmarketcap’ make at least $3 million daily in terms of revenue as at 2017. One of the largest cryptocurrency exchange in the US, Coinbase ranked a revenue above $1 billion at the end of last year.

Going by the performance of the market this year which has seen most of the top cryptocurrencies lose more than 100% of their value this year, one would wonder why there is still an increase in the number of cryptocurrency exchanges instead of them to go out of the market?

Some of the reasons why they are still ranking high in profit are:

1) Some act as an intermediary between buyers and sellers: it is surprising to note that most of this crypto exchanges are still active because of this role they play between buyers and sellers of cryptocurrency. They add their own fees in other to complete a sell order or buy order. With this way, they keep earning easy revenue irrespective of how the market is.

2) Some are decentralized in their operation: Most of the cryptocurrency exchanges are decentralized. This helps them to continually make money when a transaction is executed. When the market is bullish, more buyers exist and sellers are willing to sell at a higher price, while when the market is bearish, less buyers exist and the sellers are willing to sell at a lower price to safeguard their investment as is obtained in the mainstream stock market. Transaction fees are charged, hence the exchange makes continuous revenue.

3) Through listing fee: centralized exchanges usually charge a listing fee which sometimes goes into hundreds of thousands of dollars for a crypto coin to be listed in their platform. Since, as at the end of the first half of this year, the initial coin offerings market had doubled, which shows that exchanges are in better profit even though that the trading volume might had dropped.

Through this three ways, cryptocurrency exchanges remain in profit irrespective of the market downtrend.

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