January 29, 2021 — Amid record high cryptocurrency prices as of late, crypto trading in the Philippines continues to be “very personal” according to Luis Buenaventura, Chief Strategic Officer of BloomX, a licensed virtual currency exchange in the Philippines.
2020 might have been a pivotal year for many industries, and in crypto, it’s the year where institutions have started putting Bitcoin in their portfolios. Pandemic notwithstanding, transaction volume in peer-to-peer (P2P) crypto marketplaces in the Philippines have increased in 2020 compared to the previous years. Despite assertions that global P2P transactions have decreased amid rising Bitcoin prices, there are countries where the opposite is true.
Growth of P2P Exchanges
Paxful has hit record volumes in the Philippines in 2020, beating its rival LocalBitcoins for market leadership. Paxful has been the gateway for many to first exchange cash into Bitcoin, facilitating retail and institutional trading on the platform. With more than 300 ways to purchase Bitcoin and a global marketplace of traders, Paxful facilitated record volume in the country in the last twelve months. The Philippines is Paxful’s 3rd largest market in Asia behind China and India.
Binance P2P’s entry in the Philippines has eliminated the friction of trying to send crypto to the world’s largest cryptocurrency exchange. The usual route — converting peso to XRP before sending to Binance, then converting that XRP to USDT — has been reduced to one step: Find a local seller on Binance and trade PHP for BTC direct. The exchange declined to share numbers, but said they are the biggest marketplace in Southeast Asia today.
Other international exchanges also have some form of P2P. OKEx has a cash-in P2P route, though a local representative said a cash-out option will be available soon.
Crypto Trading – Still a Personal Process in the Philippines
The increase in Bitcoin’s price in the last few weeks have coincided with a larger market rally, as other cryptocurrencies have also increased their prices as of late. This coincided with a decrease in volume in Paxful and LocalBitcoins in the last two months in the country. It is possible that users are just holding Bitcoin or might have moved to cryptocurrency exchanges or even direct exchanges despite higher spread. Some have also moved to decentralized exchanges like Uniswap where decentralized finance and play-to-earn models thrive.
After all, if there is an expectation that the value will go up in the future, purchasing it today will amount to future profit.
Still Luis Buenaventura offered a different view on the subject. For him, it’s possible that users have simply moved on from exchanges and P2Ps and proceeded to trade amongst themselves. “The most obvious reason for this decline is that crypto trading in the Philippines is still a very personal and informal business process,” he said, sharing that traders who might have met in marketplaces might eventually prefer to deal with each other directly, eliminating fees and marketplaces requirements.
This can also be observed on local Facebook groups, where there are profiles advertising themselves as “the person or entity” behind a P2P trader and offers direct trading instead, away from the marketplaces.
What Luis has described is the increasing sophistication of the Filipino cryptocurrency trader or holder. Beginners are usually advised to start using “newbie” friendly crypto apps like Coins.ph. After observing the market, the beginner realizes they can save fees by going to P2P marketplaces. Finally the beginner becomes comfortable and proceeds on cryptocurrency exchanges, local or otherwise or becomes sophisticated in arbitrage on P2P marketplaces, with some of them trying decentralized finance.
P2P will remain important in the onboarding of new users into crypto. For Luis, he said his company will continue to be one of the most active vendor on Paxful.com and will probably re-list in Binance soon. “We think these formal marketplaces are a great way to introduce new users into crypto,” he concluded.
This article is published on BitPinas: Crypto Trading Still A Very Personal Process in the Philippines