• Cryptocurrencies saw dramatically lower trading volumes in September after prices corrected
  • ‘September was subdued, following an energetic August’: eToro analyst
  • Digital currencies gaining in popularity as use of cash in transactions dwindles

Cryptocurrency investors headed for the exit en masse in September with many taking profits after leading digital currency Bitcoin made a one-year high of $17,500 in August.

Data provided by trading platform eToro shows buying and selling activity for the 10 top cryptocurrencies slumped by as much as 71 per cent in September compared with August.

“September was subdued, following an energetic August,” said eToro cryptocurrency expert and market analyst Simon Peters.

Tezos was the hardest hit in September’s sell-off, with trading volumes for the digital currency dropping 71 per cent last month from August.

Other digital currencies such as Bitcoin, Ethereum, Lightcoin and XRP were also caught up in last month’s market turmoil, with their trading volumes dropping by 43 to 49 per cent on-month.

“It is worth nothing that every coin has performed positively in 2020, with software platforms such as Ethereum and Tron seeing positive gains of 160 per cent and 84 per cent, respectively,” said Peters.

Digital currency exchanges recorded $169bn of trading volume in September, said eToro, and based on reports from cryptocurrency research website The Block.

Cryptoasset September rank August rank % change in trading activity
Bitcoin 1 1 -43%
Ethereum 2 2 -48%
XRP 3 3 -67%
Binance Coin 4 7 -13%
Neo 5 10 2%
Tron 6 8 -23%
Ada 7 5 -44%
Tezos 8 4 -71%
MIOTA 9 9 -50%
Lightcoin 10 12 -49%

Bitcoin price touches one-year high in August of $17,500

Bitcoin’s price hit a low of $14,000 in mid-September after soaring to a one-year high of $17,500 in mid-August, according to cryptocurrency exchange, Independent Reserve.

Only Neo escaped the cryptocurrency market panic as its trading volume was the only one of 10 digital currencies to increase in September, albeit by a marginal 2 per cent.

Retail investors in Australia are increasingly trading digital currencies in addition to shares and other financial instruments.

 

Bitcoin hit a one-year high of $17,500 in August
Bitcoin hit a one-year high of $17,500 in August. Source: Independent Reserve

Seasonal factors, profit-taking and US dollar blamed for market panic

Several reasons were floated by traders for the heavy sell-off in September ranging from seasonal factors to profit-taking and a recovery in the US dollar.

The index for the US dollar, seen as a rival to cryptocurrencies, recovered to a two-month high of 94.64 in late September, although the greenback has since declined into October.

September is traditionally a slow month for cryptocurrency trading, occurring in the northern hemisphere holiday season.

Profit-taking is the most likely explanation with investors choosing to pull profit from the market after a strong price rally, according to eToro.

“With some exceptional gains made across a number of crypto-assets over the last few months, investors were clearly looking to take some of these profits,” said Peters.

“Investors therefore could be holding cash before again dipping into Bitcoin or other crypto-assets should they feel they are embarking on another bull run,” he said.

Trading activity was expected to pick up in cryptocurrencies as market volatility rises.

Central banks including Australia’s Reserve Bank are examining launching their own digital currencies as the use of cash in transactions dwindles.