Cryptocurrency exchanges seem to be popping up everywhere you look. While the major players that have been in the industry (i.e., Binance and Coinbase) for several years continue to dominate, smaller exchanges have emerged offering their unique benefits.
The regulatory landscape of cryptocurrency exchanges remains unclear. Fiat-on-ramps such as Coinbase and Gemini have begun working closely with regulators, while crypto-to-crypto altcoin markets have remained steadfast in avoiding harmful regulatory ecosystems.
As interest in ICOs continues to decline, market players are turning to cryptocurrency exchanges as one of the primary options for high-yield marketing and building organic communities of users. The competition may seem to be ramping up, but further analysis reveals endemic wash trading practices demonstrated through SEO and other web traffic analysis.
BDCenter — a digital marketing and consulting firm — recently released an extensive report detailing the marketing, SEO, web traffic, and social media statistics among 30 of the largest cryptocurrency exchanges today.
Jurisdiction of cryptocurrency exchanges tends to focus primarily on the regulatory climate for digital assets. BDC identifies that China currently has the most exchanges (10) while the U.S. follows in second with six. Interestingly, China’s policies on cryptocurrencies are more unfavorable than most countries, leading to six out of the ten located in the country residing in Hong Kong, a more independent city-state than many Chinese areas considered a “Special Administrative Region.”
However, Binance — the largest exchange in adjusted trade volume per 24 hours — recently moved their headquarters from Hong Kong to Malta, which has become a haven for blockchain and digital asset-focused entities. Singapore has also emerged as a hotbed of cryptocurrency activity; currently housing five exchanges of the 30 analyzed in the report.
The situation in the U.S. is slightly more nuanced as exchanges operating as crypto-to-crypto altcoin markets have intentionally avoided the reach of U.S. regulations. Bitfinex — a massive exchange offering fiat services — has continually struggled to retain sustainable banking services and is registered in the British Virgin Islands with their headquarters in Hong Kong. In the U.S., exchanges have emphasized working with regulators, allowing for most U.S. exchanges to offer fiat-to-crypto services under strict KYC/AML regulations.
Exchanges with native tokens have become a popular choice among exchange operators. For instance, Binance’s BNB coin is used for trading fee discounts on the platform and is available on several other major exchanges. Out of the 30 exchanges analyzed by BDC, 13 had a native token.
Native tokens among exchanges can serve as valuable marketing tools that retain loyal user bases and can be used in combination with affiliate/referral programs. Additionally, they can prove to be valuable revenue sources for exchanges if they become widely used.
However, the decreasing confidence in altcoins resulting from the extended bear market has led to a substantial decline in exchange token values, with the exception being Binance’s BNB coin, which has fared relatively well during the market downturn. Many exchange tokens are traded at extremely low volumes or are purely used in incentive structures such as affiliate programs or voting on marketing topics within the exchange’s ecosystem.
Analyzing Web Traffic & Advertising Effects
- Coinbase ~ 422,000
- Binance ~ 312,000
- Okex ~ 106,000
- Huobi ~ 102,000
- Coinex ~ 71,000*
Coinex’s position among the top cryptocurrency exchanges in active users is intriguing for several reasons and requires a few qualifications. First, BTI did not explicitly add Coinex to their Trading Advisory List of exchanges that perform transaction mining and inflate metrics via wash trading because:
“Coinex and Coinsuper were the only 2 transaction mining exchanges which were not added. We found their web and mobile numbers to be to in line with an estimated percentage of API trading under 75%.”
Second, BTI received substantial criticism for their initial report findings on Chinese exchanges back in August, so they worked with Chinese SEO experts and analytics professionals to evaluate discrepancies in their data. They concluded that up to 50 percent of web visitor statistics from in-house analytical data was being underreported due to the Great Firewall of China. Further, they state:
“We also found data estimated by SimilarWeb (an outside analytics firm) to be under-reported by up to 250% from both analytics experts, as well as in-house analytics screens shared with us by exchanges with high Chinese visitor counts. Based on this information, exchanges with a large amount of Chinese visitors were adjusted upwards by 300%.”
These revelations account for the adjusted 300 percent website traffic for Coinex despite its 65 percent API trading and roughly $77 million (11th) 24-hour volume. BDC highlights that 70,000 visitors per month for Coinex is generated through paid search traffic.
Okex and Huobi reflect the same adjustments as Coinex as they have high API trading percentages and low web traffic that is bolstered with the 300 percent Chinese traffic adjustment.
Conversely, both Coinbase and Binance have lower API trading percentages at 25 and 35 percent, respectively.
BDC identifies that Binance retains an impressive 51 million unique visitors per month, with nearly 80 percent counting as direct visits. Advertising traffic accounts for 2 percent of the total traffic volume for Binance, including paid search traffic and advertising network traffic.
Coinbase’s traffic is similar to Binance in that 2 percent of the traffic is from advertising while the vast majority are direct visits. Coinbase’s main advertising channels include paid Google search traffic and targeted Facebook advertising.
Okex maintains a smaller percentage of web traffic from direct sources than both Coinbase and Binance, at only 74 percent. Okex also utilizes an unidentified ‘colleague’ advertisement network as well as the advertising partner Volt Tech. Okex, like Huobi below, is challenging to analyze web traffic for considering the sheer effect of the Great Firewall and their metrics should be evaluated by taking that into account.
Huobi’s largest share of network traffic belongs to Chinese Baidu with an organic search rate of 99 percent. Interestingly, more than one-third of Huobi traffic stems from social networks where the exchange has an active presence. This discovery differs distinctly from other exchanges, where social media presences account for tiny portions of exchange traffic.
BDC’s report claims that –on average — 66.48 percent of all 30 exchange web traffic is through direct sources while 13.98 percent comes from referrals, and 10.85 percent from organic searches. The overall ratio of organic search to paid search is 96.07 percent to 5.12 percent in favor of organic search.
Twitter is the most widely used social media platform among exchanges. However, Youtube accounts for a lopsided percentage of traffic distribution, beating out both Facebook and Twitter. Despite this, the vast majority of the exchanges do not rely on social media very heavily at all and instead focus on search systems and brand requests.
Twitter accounts for the vast majority of exchange social media activity, followed by Facebook which lags noticeably. Average engagement of official Twitter exchange accounts is 52 percent, while it is a measly 4 percent on Facebook. The lack of cryptocurrency user engagement on Facebook can primarily be attributed to Facebook’s back-and-forth position on cryptocurrency advertisements, initially banning them earlier this year then subsequently easing their restrictions.
Although several exchanges use Youtube as a medium for user engagement, the metrics are negligible.
BDC also analyzes the social media engagement of exchange operators, such as Binance’s CEO CZ Zhao. However, exchange operators have relatively small social media presences and — outside of CZ — engagement tends to be irrelevant. Out of the 30 exchanges evaluated, only 17 managers have a social media presence.
Medium presents an interesting form of engagement for two of the exchanges analyzed in particular; Binance and Coinbase. Coinbase’s Blog typically is used for major announcements and analysis on major topics developing within the cryptocurrency ecosystem. Similarly, Binance’s Blog has begun spotlighting the exchange’s Binance Charity Foundation as well on touching on educational topics and developments.
Medium is popular for communicating detailed updates to users, but it is not considered a major source of web traffic and marketing for exchanges.
SEO and Target Audiences
BDC selected the following five exchanges out of the 30 total to perform web traffic analysis from search engines:
The reason that the five exchanges were selected is that the main portion of their SEO traffic comes from branded ‘vital’ keywords.
On average, 90 percent of the website traffic among the exchanges falls on the main web pages. All of the exchanges — besides Binance — retain an organic search vs. paid search traffic of higher than 99.9 percent, while Binance resides at 96.24 percent organic search traffic.
Concerning paid brand traffic, all of the exchanges — except Bittrex — have between 90 – 92 percent paid brand traffic, while Bittrex has 86.33 percent branded vs. non-branded.
Binance dominates total backlinks as well as leads in referring domains (19.8K). Binance has grown exponentially in reference mass since its inception, outpacing other exchanges by an enormous margin.
Image Credit – BDCenter Report
According to BDC, the quality and number of donor domains play a prominent role in the SEO of the top exchanges. The five exchanges — outside of Binance — have a similar number of reference links, despite significant overlap in placement domains. Binance has roughly double the number of donor domains as each of the other four exchanges.
Approximately 50 – 60 percent of the total donor domains among the exchanges are from .com domains.
BDC’s target audience analysis offers some insights into the overall trading activities by region. The U.S. dominates the number of traders on the 30 exchanges evaluated, accounting for 30.47 percent of the total traders. Interestingly, Russia came in second at 15.37 percent followed by China at 11.23 percent.
Surprisingly, Japan is eighth on the list of traders by country, with the Japan Financial Services Agency estimating there are more than 3.5 million traders in the country.
The primary age group that trades cryptocurrencies is the 25 -34 group, which accounts for 37.38 percent of total traders. The 35 – 44 age group follows in second at 21.73 percent of traders.
Both the Blockchain Transparency Institute and BDCenter provide some useful metrics for evaluating the state of marketing and demographics within the cryptocurrency industry. Marketing initiatives among exchanges seem to particularly emphasize increasing traffic through enhanced SEO and referral domains rather than social media, which is largely absent — outside of Twitter — in exchange marketing tactics.
The uncertain regulatory environment in many countries where exchanges are based as well as the timid approach that the mainstream takes with cryptocurrencies probably drives the lack of social media marketing. Exchange web traffic metrics are difficult to obtain accurately, especially in the case of China. Despite this, the web traffic of exchanges correlates closely to their adjusted trading volumes and provides excellent insights into which exchanges are inflating their trading metrics.
The network effects of Binance and Coinbase appear to be the primary growth drivers of their traffic. Rather than employing outsized marketing initiatives, these exchanges draw much of their popularity and traffic from the utility and distinct options that they provide to traders. In the case of Coinbase, the advantages are its friendly UI and introductory fiat-to-crypto feel while Binance offers a highly volatile crypto-crypto pairing on an advanced technical trading platform.
It is important to note that exchange volumes have decreased significantly since the beginning of the year, and with them, the web traffic has also dropped. Once market sentiment reflects more positively again, expect web traffic and other marketing metrics among exchanges to indicate user preferences as the market and exchange landscape continue to develop.