Only the fittest will survive, or so the saying goes. This mantra does not only apply to the animal kingdom, it works in the business world also and surviving is what a lot of crypto exchanges and companies are struggling to do as the bear market enters its second year.
Global Expansion Success For Huobi
The larger crypto exchanges have a better chance of weathering the storm. Downsizing may be inevitable but their large client base should keep them afloat until the crypto winter abates and markets turn around again. Huobi is one of the big players but it has gone from awarding its senior executives multi-million dollar bonuses in Bitcoin to axing staff a year later.
According to the SCMP Beijing based Huobi Group is still turning a profit despite trade volume shrinking to a tenth of what it was a year ago. CEO of Huobi Global, Livio Weng Xiaoqi, said that transaction fees make up the bulk of profits adding; “We do not know how long the bear market will last, so it is still possible that we will struggle to survive. We have to plan in advance and spend money carefully.”
Huobi’s daily trade volume was well over two billion dollars a year ago, today it has shrunk to just $318 million according to Coinmarketcap. Reported volumes on exchanges vary hugely though so all figures must be eyed warily. What is indisputable though is that volumes and profits are way down along with crypto markets themselves.
Venture funding and news aggregation are loss leaders for Huobi and this is where it is making cuts while still expanding its core business. Weng added that the recent closure of its Shenzhen research subsidiary and downsizing of its Huobi Info news app has resulted in the loss of around 100 positions. Huobi still employs over 1,300 people globally however and was the top crypto exchange at one point.
Huobi’s success is its global reach, with over 70% of its customers being Chinese who live outside of China, or use VPN’s, it has access to a huge and growing market. “Our greatest advantage over competitors is that we have licenses in all major countries – we are the only one among top global exchanges,” Weng added.
Conversely Binance has pulled out of Japan and will not deal with the US due to increasing regulatory pressure a less than positive stance from the government. Huobi has operations in both of these countries and Europe where crypto to fiat trading licenses have been obtained. Its key to survival at the moment is the predominantly Asian client base which is still very hungry for crypto in spite of the ever present bears.