The first Crypto Long & Short format in 2021 has a different format: unlike the usual articles, I asked some leading industry analysts from Kaiko, IntoTheBlock, skew.com and Arcane Crypto to share their favorite charts with you. This year, the depth and quality of indicators available to market observers have been developed by leaps and bounds. The work of these analysts and other analysts is helping investors not only better understand the cryptocurrency ecosystem, but also understand its uniqueness. There is still a long way to go. A fascinating asset and its market. Click on the links below to find more information about the work of these analysts and the data they provide.
Clara Medalie, Kaiko’s business development and strategy
The market crash in March will be an unprecedented decline in history, and it will be one of the sharpest and fastest sell-offs sweeping the cryptocurrency market. In an hour, the price of Bitcoin plummeted by thousands of dollars, and the liquidity of the order book almost disappeared. This chart shows the sum of all bids and asking prices placed on the Coinbase BTC-USD order book before, during and after the first price crash. We can observe that when the crash started at around 10:30 in the morning, the number of orders around the median price plummeted, leading to a liquidity crisis and a sharp drop in prices.
This chart is one of my favorites because it shows the important role that market makers play in creating and maintaining liquidity in the cryptocurrency market. In the end, the March crash proved that asset prices generally reflect less “real value at a point in time allocated through the market-based price discovery process,” and more are the product of an endless feedback loop triggered by automatic liquidation. And reduce the depth of the order book. As the cryptocurrency market matures and order liquidity increases, we can expect the magnitude and frequency of such price crashes to decrease.
Lucas Outumuro, Senior Analyst at IntoTheBlock
IntoTheBlock classifies on-chain transfers of more than $100,000 as “large transactions.” The total trading volume of large-scale transactions can replace the trading activities of institutional investors and high-net-worth individuals.
With the interest of institutions, Bitcoin’s large transaction volume will increase substantially in 2020. Comparing the average large transaction volume of the Bitcoin blockchain in December 2020 relative to December 2019, we observe that it has increased from an average of $7 billion per day to more than $30 billion, an increase of more than four times.
Emmanuel Goh, CEO of skew.com
In 2020, institutions finally accepted Bitcoin, but not always in the way people expected. For example, sophisticated investors such as hedge funds have been studying the inefficiencies of this emerging market in order to obtain price differences. This in particular translated into the leveraged capital position of CME Bitcoin futures, which set a new record of short positions almost every week in the last quarter of 2020.
Bendik Norheim Schei, Head of Arcane Cryptocurrency Research
In the first half of the year, the adoption rate of the DeFi sector was low, and loan agreements dominated this area. At that time, the total value locked in DeFi was relatively stable, mostly between US$700 million and US$1 billion. Then, on June 16, the compound issued its governance token. Then, interest in the field surged (literally quite large), as single-yield agriculture attracted many new players into the field.
- The total value locked in DeFi has increased from $670 million to $14.5B in 2020, an increase of 2100%.
- As of December, DeFi had 1 million unique addresses, a 10-fold increase compared to January. This year, the growth of lending platforms and decentralized exchanges (DEXes) has been particularly strong, while the growth of derivatives platforms has been more moderate (albeit very strong).
Forecast for 2021: With stricter regulations on the centralized derivatives market, the DeFi derivatives platform will achieve greater growth, thereby guiding traders into alternative markets.
Does anyone know what happened?
Rather than trying to review the annual or even weekly performance of the macro market (because many people will be more in-depth and far-sighted than me), I will leave you with an awesome summary that you hear from your mouth. A child who was particularly good at observing was asked how he would summarize 2020:
“It’s like when you have to cross the road, first look carefully to the right and then to the left, and then you will be knocked down by a submarine.”
However, I will share with you our usual relative performance chart, because…
understand deeper Bitcoin market development in 2020Please check the work of my colleague Bradley Keoun.
Anthony Scaramucci Skybridge Capital $182 million has been invested in Bitcoin. take away: The Bitcoin Fund’s handbook lists increased adoption rates, reduced risks, low interest rates and “unprecedented currency printing”, which are some of the main reasons why Bitcoin is becoming more and more respected. A sentence from the brochure: “Bitcoin is digital gold. Gold is better than gold.”
Black stone It is seeking to hire a vice president to help build demand for the company’s encryption-related products. take away: The trap here is BlackRock Planning encryption products! This will definitely indicate that mainstream institutions have accepted it-BlackRock is unlikely to take this step unless it has seen some demand.
Fund manager Van Eck An application for Bitcoin exchange-traded funds has been submitted to the US Securities and Exchange Commission (SEC). take away: VanEck had proposed but failed to file an ETF, but withdrew its latest application in September 2019. This latest attempt shows that the company believes that the current environment is more favorable than in the past, and we are likely to see other ETF managers submit further proposals in 2010. The next few months.
Early this week, Chicago Mercantile Exchange (CME) It was briefly the largest Bitcoin futures exchange in terms of open positions, reaching $1.66 billion. take away: I think this is the clearest indication that institutional interest in Bitcoin is growing. At the beginning of 2020, CME Bitcoin futures open positions ranked fifth, second only to BitMEX, OKEx and Huobi. However, the daily trading volume of CME Group’s bitcoin futures is much lower than that of the exchange’s Asian counterparties, which means that trading volume is reduced and the strategic positioning is more than that of crypto derivatives exchanges outside the United States.
GazpromThe oil subsidiary of the Russian gas giant Gazprom has opened a cryptocurrency mining site on an oil drilling site in Siberia. take away: There are so many threads available: 1) Oil and gas producers regard cryptocurrency mining as a diversified source; 2) The geographic distribution of crypto mining activities; 3) Gazprom is State-owned Enterprises, (indirectly) participate in cryptocurrency mining.
Canadian Augmented Reality (AR) Company NexTech AR (NTAR) plans to use its funds to purchase $2 million worth of Bitcoin to “achieve capital diversification.” take away: This is not MicroStrategy’s (MSTR) bet this year, because the money only accounts for 15% of the cash available at the end of the third quarter. The company’s CEO stated that he believes Bitcoin has more long-term appreciation potential than simply holding cash. In the coming months, we are likely to see more similar announcements.
National Football League players Russell Ogun Half of his $13 million annual salary will be obtained through cryptocurrency startup Zap, and his Strike product enables traditional salary to be converted into Bitcoin. take away: In addition to the much-watched publicity, this also gave Bitcoin (and we are likely to see more athletes making crypto-related announcements in the coming months), which also marks products in markets outside of institutions The scope is getting wider and wider. Zap’s chief executive said that Strike can now be used as a checking account by establishing a partnership with two banks that have yet to be named. More importantly, Okung’s advocacy of Bitcoin is not news-he launched the bitcoinis project, which wrote and hosted gatherings about cryptocurrencies-so we can expect to see more comments that attract public attention next year.
For those working in the industry, it is interesting to watch the number of Bitcoin failures and imminent death announcements in a smug way. Website 99bitcoins.com has been tracked Bitcoin’s “itu report” Now it shows that cynics are reporting. take away: This is understandable because Bitcoin has been through several winters and the market has plummeted. It is also regrettable, because one of the overlooked benefits of criticism is that it forces us to improve our interpretation. There is still a lot of education to do. However, selling Bitcoin seems to be more professionally risky than recommending clients to invest.
Ripples suit: In view of the SEC lawsuit, the number of cryptocurrency platforms that abandoned XRP continues to grow, with Coinbase, Binance US, Genesis, OKCoin, Crypto.com and eToro USA all topping the list. This week, the story changed, and Coinbase customers filed a lawsuit against the exchange for deliberately selling XRP as unregistered securities and collecting commissions.