How has the popular cryptocurrency moved in the last four years? Radical changes in trading volumes, capitalization, active "wallets" and signals for the future.
Opinions about the value of bitcoin, of course, differ. However, the personal opinion of each of us individually does not matter so much. The market has decided that the cryptocurrency space is a promising alternative to the existing monetary system.
Those who claim that bitcoin is difficult to use or that it is used by a few are obviously ignoring its dynamic nature. His ability to evolve. Yesterday we mentioned that developments in bitcoin are not just progressing, they are running. This is not an exaggeration. No one has any idea what changes will take place, even in the near future.
In order to understand it, we will take a look back today and compare where it was 4 years ago, in the previous halving.
Capitalization and trading volume
The capitalization of bitcoin was $ 10.6 billion in July 2016, and today it exceeds $ 175 billion. It has increased 16.5 times in the last 4 years. A trip from $ 650 to $ 9,700 is not without reason. Millions of investors value bitcoin as more valuable today than ever before. For so many years, if there was a problem with its operation, it would have been identified. The opposite happens. As Paul Tudor Jones put it , with each passing day, bitcoin survives and confidence grows.
The daily trading volume in July 2016 was $ 122 million. Indicatively yesterday, transactions worth 2.8 billion took place, according to Bitwise, which counts only the 10 most reliable exchanges. This is an increase of 23 times in 4 years . Not all cryptocurrencies, only bitcoin. To have a measure of comparison, the entire Greek stock market, yesterday, made a turnover of 45 million euros.
The price of bitcoin is a unit of measurement of its dynamics. Not necessarily the most important. What we are interested in in a payment system is above all its security. The more computing resources required for its operation, the more secure the network is.
At this point, the progress of bitcoin is impressive. The average of 7 days in fragmentation rate (hash rate) was 1,52 TH / s in July 2016. More has reached 115,74 TH / s, i.e. increased 76-fold! How important is this? When the network reaches a hash rate of 10 Th / s, the amount of computational power devoted to processing transactions and securing the network corresponds to 10 trillion calculations per second.
The more users of a currency, the higher its value. A popular measure for the trend in bitcoin adoption is the rise of e-wallets. What is striking here is that the trend is strikingly similar to the pace of Internet adoption , according to a study by Deutsche Bank. Since there is a similar picture in the rate of acceptance and use, does it not make sense for them to have a similar rate of development in the future? bank analysts wonder (their prediction is the dashed line).
The chart below from blockchain data company Glassnode reveals that bitcoin deposits in exchanges are at a 3-year low. Why is it a positive element? Because in order to sell your bitcoin and make it in euros or dollars, you must first place it in the exchanges. The reluctance to liquidate bitcoin placements is obvious.
The conclusion is confirmed by the direction of the users to transfer their coins in wallets, taking them out of the exchanges. If a user intends to sell his cryptocurrencies in the near future, it is unlikely that he will remove them from an exchange. When carried in a wallet, they are usually for long-term storage.
According to Glassnode, those who bought during the big fall of March were not discouraged. They kept their place. With the recovery of the market, emotion among market participants began to diverge, but those who apply the buy and hold strategy (hodl in crypto slang) continued to dominate.
The explosive rise of stablecoins
Impressive is the increase in demand for stablecoins , cryptocurrencies that have a stable exchange rate against the dollar. In total, they have exceeded 10 billion dollars, with 85% being placed in Tether. The increase made since February is 70%.
The most likely scenario is that this money is waiting to be placed on bitcoin and other cryptocurrencies. However, this increase may be due to depositors from countries that find it difficult to obtain hard currency. In the period of the pandemic, it is not only the FED and EKT that have indulged in the "sport" of "printing" money, but all the Central Banks.
Prospects of price
If the history of bitcoin is repeated in a similar way, only its owners can be optimistic. The following diagram shows how similar the periods 2012-2016 are to the corresponding period 2016-2020.
The boost of the above optimistic scenario, always based on data from the past, is that after halving follows a significant upward movement. In the first, the increase in the price of bitcoin was 8.189%, while in the second, only… 2,884%. If this ratio continues to rise, we should expect the new peak to be 1,000%. Therefore, given that the third halving found the price of bitcoin around $ 9,000, it is not at all unlikely that it will reach $ 90,000.
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