After March 12, how is the digital currency market recovering?
Editor's Note: This article comes fromCrypto Valley Live (ID: cryptovalley)Crypto Valley Live (ID: cryptovalley)
Highlights
, Author: Nate Maddrey & Coin Metrics Team, translation: Ling Jie, reproduced by Odaily with authorization.
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Highlights
After the March 12 crash, Bitcoin (BTC) and Ethereum (ETH) have largely recovered, while assets like Bitcoin Cash (BCH) and Litecoin (LTC) have temporarily lagged behind.
Trading volumes on all six major exchanges continued to soar in April and May, to a slightly lower extent than March 13.
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Another trend that emerged after March 12 is the growing number of addresses with low digital currency holdings. Both BTC and ETH addresses have increased significantly since March 12.
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On March 12, the cryptocurrency market experienced its largest drop ever, with many assets dropping more than 50% in less than 24 hours. Now, more than three months later, the market has turned around and gradually recovered. However, not all assets are responding in the same way, and markets will continue to move rapidly as global uncertainty remains high.
In this weekly feature, we look at network data (i.e. on-chain data) and market data to assess how different assets are recovering and analyze some of the changes following the dip.
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Different Assets Recover Differently
The chart below shows the market capitalization of nine major crypto assets over the last year. All nine assets saw their market capitalization soar in the month leading up to the crash. BTC’s market cap hit $188.76B on Feb 14th, (highest point in 2020). ETH’s market cap also peaked at $31.25B on Feb. 14.
（Source: Coin Metrics Network Data Pro）
After the crash, BTC’s market cap recovered to $187.58B by June 1, 2020, just shy of its February high. Likewise, ETH’s market cap hit $27.69B on June 1.
The price recovery has shown something similar. The chart below shows the price recovery (i.e. the percentage recovery of initial price) from February 14th (2020 high for many cryptoassets) to June 14th.
（Source: Coin Metrics Reference Rates）
Apart from BTC and ETH, some assets such as Cardano (ADA) and Crypto.com Coin (CRO) have recovered relatively well. OmiseGO (OMG), which launched on Coinbase Pro on May 19, also performed well.
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Stablecoin volume surges
(Source: Coin Metrics Market Data Feed)
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(Source: Coin Metrics Network Data Pro)
This increase in volume corresponds to the huge increase in Tether supply since February 2020. Tether is currently issued on several different platforms, including Ethereum (USDT_ETH) and Tron (USDT_TRX). USDT_ETH supply more than doubled from February to May 2020, and USDT_TRX supply more than tripled in the past two months.
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However, it is important to note that an entity can have multiple addresses at the same time, so an increase in addresses does not necessarily mean an increase in usage. Alternatively, the uptick could be due to a small number of entities spreading their tokens across many addresses.
（Source: Coin Metrics Network Data Pro）
Summarize
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Network Data Insights
Network Data Insights
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（Source: Coin Metrics Network Data Pro）
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It is worth noting that the ETH daily fee has increased by more than 178.5% week-on-week, which seems to have risen sharply. The actual reason was because of two particular transactions that inexplicably cost $2.6 million in transaction fees each.
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LTC active addresses decreased by 15.8% week-on-week. While BCH addresses increased by 11.3% week-over-week, most other on-chain metrics for BCH declined, including a 46.8% drop in transaction volume.
（Source: Coin Metrics Network Data Pro）
On June 11, there were 1.05 million Bitcoin daily active addresses, the highest single-day total in 2020. Since June 2019, the number of Bitcoin daily active addresses has not exceeded 1.05 million.
（Source: Coin Metrics Network Data Pro）
The number of Ethereum daily active addresses has also risen sharply over the past few weeks. Currently, Ethereum active addresses are approaching levels not seen since January 2018. The following shows daily active addresses smoothed using a 7-day rolling average.
（Source: Coin Metrics Network Data Pro）
Interpretation of market data
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Interpretation of market data
In the modern Bitcoin market, Bitcoin's 30-day rolling average volatility has only dropped below the 50% threshold 35 times (if we take the period from November 29, 2013, when Bitcoin initially hit $1,000, as the Bitcoin Modern Market Start).
This leads us to consider what happened after these periods of low volatility. Here's what happened 10 days before and 50 days after periods when volatility fell below 50%. You can see the median and mean trends marked in red, indicating a pattern of rising volatility after the tenth day.
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Is this a rising or falling signal? It's hard to tell just by relying on historical price data. However, we thought it would be interesting to repeat the above analysis to look at price changes rather than volatility. But there were no consistent results either -- sometimes prices went up, sometimes they went down. Thus, both the median and mean hover around 0% for 40 days.
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