Almost two years have passed since the crypto boom of the last months of 2017. According to the news feed, it seems as if all mining farms were sold for spare parts, ICOs were closed, and crypto investors went bankrupt back in 2018...
But let's see what interesting things are happening in the world of cryptocurrencies today.
On December 17, 2020, the Bitcoin rate reached its historical maximum and amounted to $20,089 dollars (1 million 183 thousand 41 rubles).
Soon after this, a sharp drop began to 6-8 thousand dollars (330,000-440,000 rubles) in February 2020, and by December 13, the rate dropped to $3,285 (218,189 rubles). In those days, many articles were published about the “burst of the bubble”, “destroyed pyramid”, “end of the scam”...
But the decline gave way to growth again, and today (October 9, 2020) Bitcoin costs $8,451 (546,761 rubles).
Those who bought this cryptocurrency before November 23, 2020 (at a rate below $8239) and had the patience not to sell are now in a slight plus, although the situation may change in the coming hours.
But regardless of the Bitcoin rate, the world of cryptocurrencies continues to actively develop. Here are 4 interesting facts about its current scope and the main trends of recent times.
About 300 thousand transfers between Bitcoin wallets are made in the world every day
According to blockchain.com, from January 1, 2009 to October 8, 2019, 462 million 605 thousand 970 transactions were made. The graph clearly shows how this number grew from June 2009 to October 2019.
▪ January 30, 2009 – 2413 transactions. ▪ October 6, 2009 – 24,612 transactions. ▪ October 6, 2013 - 24 million 984 thousand 357. ▪ October 2, 2020 - 160 million 94 thousand 28. ▪ October 2, 2020 - 346 million 353 thousand 41.
Despite talk about the “collapse”, “death” and “decline of an era” of Bitcoin, in 2020, on average, 300-350 thousand transfers were made between BTC wallets around the world every day (the maximum this year was 452 thousand ( May 2)).
And this value has not fallen below 100 thousand since 2020.
And, probably, in the next few years this figure will only grow (with periodic recessions), since there are a huge number of people who urgently need cryptocurrencies to make excess profits:
▪ Sellers of drugs, weapons, contraband and other goods on black markets who benefit from anonymous transactions. Criminal figures began to actively use cryptocurrencies within 1-2 years after their appearance.
▪ Companies that practice various schemes for tax evasion and “cash out” of illegally obtained funds.
▪ Crypto exchanges and large crypto traders.
Back in June 2011, Wired magazine wrote about how for 50 BTC (then 4.5 thousand rubles, today more than 26 million rubles) you could order 100 micrograms of LSD (one brand). Since then, cryptocurrencies have increasingly penetrated the shadow economy.
Bitcoin analysts explain
With the exception of a few forecasters, the move left many traders confused. Youtuber Sunny recently joked that he recently made the "worst trade since [he] got on Youtube" when he bought $4,200. The point is that there was no clear fundamental catalyst that led to this movement. Undoubtedly, the fundamentals for the ecosystem are on the upswing in recent times as there are constant macro factors, institutional announcements and technical developments that have been a major boon for the industry. But many are confident that Tuesday's move, which took BTC from $4,150 to $4,650, an ~14% gain, was purely technical.
In response to a comment that CNBC was going to dispel optimism from the Bitcoin news tomorrow, industry trader The Crypto Dog explained that the move was simply to seek liquidity. Due to the relatively low volume, as evidenced by the lack of a large green candle below, this may not have been the “whale buy order” some were counting on.
And once $4,200 was broken, there were few holding orders on the order books after $4,000, even though there were important resistance zones in between. Thus, the short squeeze, or "cascading liquidation" as Crypto Dog called it, perpetuated Bitcoin's short surge to $5,000+.
Investors outside crypto will wake up in the morning and wanting to know what happened in [email protected] and others will report the move.
Pause the celebrations, study it, understand it…try to explain it.
— David Nage?? (@DavidJN79) April 2, 2019
Crypto Quantamental expressed similar sentiments, but with a more bullish tone. He explained that the move was a simple one, following a week of consistent gains, a clear move to test the $4,200 resistance, a decline in the long-short ratio, and huge air above $4,200 to manage the move. It all added up to a monumental 15% pump - the first of its kind in months.
Amen.
But journalists need news to explain moves, something more tangible.
Something like
“Bitcoin spiked higher as Asian speculators responded positively to political developments”
— Alex Kruger (@krugermacro) April 2, 2019
The main purpose of cryptocurrencies today is to generate income from short-term transactions
On October 9, 2020, the market capitalization of 2961 cryptocurrencies listed on the exchange amounted to 228 billion 861 million 987 thousand 233 dollars (almost 15 trillion rubles). This is about 0.25% of annual global GDP ($87,265,226,000,000 in 2020 according to the International Monetary Fund).
For comparison: $219 billion is the GDP of Greece in 2020 (50th place in the world).
Moreover, the trading volume over 24 hours is equal to more than a quarter of the market capitalization - $57,215,673,840 (3 billion 715 million rubles).
Most of the cryptocurrency in the world does not lie idle in blockchain wallets, but is endlessly bought and sold, sold and bought. Much of this process happens automatically, without the participation of real people.
In March 2020, the research company Bitwise published a report Analysis of Real Bitcoin Trade Volume (Bitwise Asset Management Analysis of Real Bitcoin Trade Volume).
It (on page 13) reports that 95% of trades on cryptocurrency exchanges are fictitious transactions. And that the data from coinmarketcap.com, the #1 source of information for journalists, is exaggerated.
For example, today, according to coinmarketcap.com, the daily Bitcoin trading volume is $16,172,464,293 (about a trillion rubles). And according to the website bitcointradevolume.com (created by Bitwise to monitor the real situation on the market) - only 666 million 640 thousand 022 dollars (about 43 billion rubles).
On average, about 95-97% of cryptocurrency transactions are fictitious and generated by bots. Sharp exchange rate fluctuations are artificially created, which create ample opportunities for quick earnings. For example:
On September 1, 2020, Bitcoin cost $9,607, and on September 6, 2019, $10,890. Profitability of more than 10% in 5 days.
A large player can invest 10 million dollars and earn a million in less than a week, but at the same time, a thousand small traders can, on the contrary, lose 10-20% of their invested money per week.
Or here’s another example (typical of small altcoins):
The Cosmos cryptocurrency cost $1.95 on September 5, 2020, and $3.53 on September 16. 45% profit in 11 days.
Such opportunities attract many hunters for easy money. And from each transaction, the trading platform earns 0.1-0.2% commission + commission for depositing/withdrawing money. Each of the 20,653 exchanges, of which there were 20,635 just yesterday, has its own conditions.
Exchanges receive a significant portion of their income from listing fees —fees for bringing new cryptocurrencies to the exchange.
The price for such a service varies from several thousand to more than a million dollars (data in the picture for different sites from blog.goodaudience.com), and there are enough people who want to create a “second Bitcoin”.
Bitcoin crashed to $7,500 - what's happening?
Bitcoin on Thursday fell below the important psychological level of $8,000, which has been holding back its decline in recent days.
Some experts attribute the weakening of Bitcoin to the exit of Asian, and primarily Chinese, investors from the cryptosphere. This happened after the PRC leadership announced that supporting the blockchain industry in the country does not at all mean relief for the cryptocurrency industry. Moreover, Beijing even promised to increase pressure on representatives of the cryptosphere, and first of all, on miners.
Rumors about the closure of Binance's Shanghai office by police led to the market falling to $7,500, writes bits.media. Information appeared online that the Shanghai office of the Binance cryptocurrency exchange was closed by the police, and Binance employees had to move to Singapore or work remotely. The exchange denies these rumors.
Last week it became known that Shanghai authorities organized inspections of businesses to identify illegal trading in cryptocurrencies. However, Binance denied the fact of the police search, clarifying that the exchange does not have a registered office in Shanghai, and most of the exchange's employees in China work as freelancers.
There is a debate on Twitter regarding the capitulation of miners, writes forklog. Some experts believe that the so-called capitulation of miners will put strong pressure on quotes.
An analyst at Elias.eth notes that on Tuesday, one of the largest outflows of assets this year occurred from the wallets of miners who did not belong to any large pool, thus indirectly confirming the version of the forced capitulation of some participants in this business.
The first cryptocurrency has been declining for the third week in a row. This trend flies in the face of a historically successful November – on six occasions over the past eight years, Bitcoin has risen this month. It is noteworthy that this trend was disrupted for the first time in 2020.
Skeptics believe that BTC will drop to around $6,000 in the fourth quarter, and only then will consolidation resume. One of the supporters of this development of events is the Bitcoin Jack trader. He does not exclude a more pessimistic scenario, in which in the first quarter of 2020 BTC will trade in the range of $4200-5200.
“Bitcoin has almost fully returned to growth on Chinese FOMO and is at risk of falling towards $5,000, where the previous consolidation area lies. Many forecasts are now based on past patterns. But past trends don’t work because the composition of the crypto market has fundamentally changed. Now there are institutional investors on the market, futures are traded, and regulators are closely monitoring the situation. Expecting Bitcoin growth based on halving may now be the main misconception, since the market will definitely play against the event that everyone knows and expects,” notes the FxPro analyst team.
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On topic: 08/14/2020 Declining Bitcoin dominance: positive or negative? 08/14/2020 Authorities will begin monitoring transactions with cryptocurrencies 08/13/2020 Kraken predicts Bitcoin will soar by 200% in the near future 08/13/2020 Bit comment: The crypto market has returned to growth 08/12/2020 Bit comment: Bitcoin has pushed off from 11,000. Will they buy it or not?
Of the 2,961 cryptocurrencies listed on exchanges, no more than fifty are actively used
On October 7, 2020, 66.73% of the market capitalization of all cryptocurrencies was accounted for by Bitcoin, and 8.76% by Ethereum. Another 8 cryptocurrencies have a share of 0.24 to 5.31%, and the remaining 2947 account for only 14.18%.
At the same time (here the data is as of October 8, 2020):
▪ only 12 cryptocurrencies have a capitalization of more than a billion dollars; ▪ about 50 cryptocurrencies have a capitalization of more than $100 million; ▪ about 300 cryptocurrencies have a capitalization of more than $10 million; ▪ about 900 cryptocurrencies have a capitalization of more than $1 million.
In addition to two thousand cryptocurrencies with a capitalization of less than one million dollars, there is still a huge number of altcoins that have not begun to participate in trading (the website coinmarketcap.com analyzes data from 20,409 trading platforms).
Creating your own cryptocurrency is not difficult, there are many ways. For example, you can do this online using the Waves platform or customize one of the ready-made code templates, but promotion requires significant investments.
There are 5,969 cryptocurrencies mentioned in the coinlib.io encyclopedia.
And about half of them do not participate in trading on the markets, since their creators did not find the funds to pay the listing fees of crypto exchanges, or simply did not make any serious plans for the development of their projects.
The catalog contains PutinCoin, RasPutin Online Coin... But Buzcoin (cryptocurrency from Olga Buzova) is not in the catalog, just as this cryptocurrency was not found in the database of the website blockspot.io.
It is not known exactly how many other such fly-by-night altcoins are in the world, which were created simply for the sake of information, without counting on further promotion.
But even listing on the stock exchange is only the beginning of complex, time-consuming and expensive work on the promotion of cryptocurrency, which in the end most creators of such projects fail to cope with.
The graph above shows the dynamics of changes in the value of the Zippie altcoin from July 2020 to September 2020. The creators invested millions of dollars in it, but in just a few months the investment depreciated tenfold, unable to withstand competition with market leaders.
This situation is typical for cryptocurrencies that are below the 400-500 position in the coinmarketcup.com rating.
