Why do I say that the encryption market is far from cool?
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(Image via Cointelegraph)
In the past month, the price of BTC has been hovering around $8,000, hindered by the downward trend line. However, at 20 o'clock last night, the market took a sharp turn for the worse, and BTC fell below $7,300 for a short time.
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(BTC daily chart from OKEx)
As of press time, BTC was quoted at $7,450, with a cumulative increase of only 98% this year. Other mainstream currencies have not performed well this year: LTC (+61%), BCH (+34%), ETH (+19%), EOS (+5%), XRP (-22%).
However, the author believes that the following data show that the market still has hope, and the winter is far from coming.
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For the market, stablecoins are an important channel for legal currency deposits, and their additional issuance and destruction can reflect the flow of funds to a certain extent: additional issuance means capital inflow, and destruction means outflow.
according toLonghashAccording to monitoring data, when the cryptocurrency entered a bear market in 2018, the issuance of USDT decreased from 2.74 billion (early September 2018) to 1.87 billion (at the end of December), a drop of more than 30%.
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(USDT issuance status)
From the beginning of this year to October 23, the number of USDT issued has increased from 1.87 billion to 4.11 billion, an increase of 119%.
It is worth noting that although the market began to decline after June 27 this year, USDT is still being issued. Since June 27, an additional 1.11 billion have been issued, an increase of 37%.
In view of the fact that USDT has been controversial and is often considered to be inflated and opaque, we decided to look at market capital flows through compliant stablecoins. CircleThe company’s USDC (USD Coin), Gemini’s GUSD (Gemini Dollar), Paxos’ PAX (Paxos Standard) and TrustToken’s TUSD (TrueUSD).
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Longhash(Increased issuance of stablecoins, Odaily statistics)
From the perspective of individual additional issuance, USDC has a maximum increase of 25% during this period, and the current increase is maintained at 12%; PAX has a maximum increase of 70%, and the current increase is 33%.
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(USDC, PAX additional issuance in the past six months)
Through the aforementioned data, we can also draw a conclusion: despite the downturn in the past few months, the encryption market still has a large amount of funds entering, and the outflow of funds is not obvious.
CoinMarketCap Data show that the average daily trading volume in June this year was approximately US$82 billion, and the average daily trading volume in October this year was US$53 billion, a drop of approximately 35%.
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Moreover, the amount of 53 billion U.S. dollars is not small, and the single-day trading volume in the same period last year was only more than 10 billion U.S. dollars. The activity of crypto market transactions this year is much higher than last year's cold winter.
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In addition, in the 2018 bear market, the largest single-day drop in trading volume exceeded 80%. The current market trading situation is far better than the bear market in 2018.
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2. The DEFI market is booming
DeFi PulseData shows that the total value of tokens currently locked in the DEFI market is $5.446, an increase of more than 87% compared to the beginning of this year.
image descriptionDeFi Pulse ）
Although after July this year, the market value of DEFI once shrank by more than 30%. However, since 2 months ago, the market has gradually recovered, and the cumulative increase in the past two months has exceeded 20%, showing a bullish momentum.
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3. The trading volume of CME contracts continues to increase
Although BitMex's trading volume has continued to decline in the past few months and hit a multi-month low ($948 million) on October 11, the more important reason for this result is its own non-compliance.
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(BitMex transaction volume)
CMESaid that the number of open contracts has continued to rise in the past few quarters, and the third quarter was only 1% lower than the second quarter; compared with the third quarter of 2018, the open interest in the third quarter of 2019 increased by 61% year-on-year; In addition, the average daily contract volume in the third quarter was 5,534 contracts, a 10% increase from the same period last year.
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(CME Bitcoin contract data)
CMECME explained that most of these transactions came from institutional investors. “Institutional flows remained strong with 454 new accounts (in the third quarter) compared to 231 new accounts in the third quarter of 2018.”
However, it is worth noting that since October this year, CME's contract transactions have declined slightly, and the average daily transaction volume has dropped to 3,376 contracts, or 16,880 BTC.
(CME October transaction data)
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4. Institutional funds continue to flow into the market BlockFi Canadian Crypto Lending Company
A report released shows that after the bear market in 2018, institutional investors' interest in cryptocurrencies is strengthening and entering the market one after another.
According to the report, there are currently 201 private funds in the United States involved in cryptocurrency investment, accounting for 1.3%. Although the proportion is not large, it is actually not small for emerging assets.
And, among these 201 private funds, 18 millionaires worth $1 billion have directly invested in cryptocurrencies, and they also manage more than $286 billion in funds; assuming that 1% of these funds invest in cryptocurrencies, then 30 - $5 billion of traditional funds enter the crypto space.
If the above report is still based on speculation, Grayscale’s report confirms that institutional users are accelerating their entry. GrayscaleRecently, encrypted asset management institutions
According to the report, despite the general correction in the earnings of Grayscale's trust products this quarter, its investment inflows tripled from the previous quarter - from US$84.8 million to US$254.9 million, an increase of more than 200%.
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(grayscale report)
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Summarize
Summarize
The market is currently in a correction cycle, and mainstream currencies including BTC and ETH are being suppressed by the 100-day moving average.Keith Wareingcrypto analyst
