CoinDesk Q4 2019 Review: A Year in Suspended Animation

It has been over 10 years because the creation of cryptocurrencies, and whereas clear narratives have emerged to justify their existence, none are decisively supported by information. 

For instance, charts counsel bitcoin’s use case as a retailer of worth is taking maintain amongst some new traders, who’ve been proven to carry the asset by way of value run-ups. Nevertheless, different metrics similar to bitcoin’s correlation to gold counsel that, throughout your entire physique of bitcoin traders, most are utilizing the asset as one thing far completely different from “digital gold.”

On ethereum, DeFi has made spectacular features, however the form of that line and a broader decline in person numbers counsel that the “internet 3.0” narrative remains to be in its infancy.

Launched at this time, the CoinDesk Quarterly Evaluation surfaces the important thing information, traits and occasions shaping crypto markets, in a 45-slide presentation format. It evaluates three completely different use circumstances for crypto throughout greater than 25 completely different information units. The outcomes of this evaluation counsel a dominant narrative for bitcoin and various cryptocurrencies has but to emerge.

Readers of this report are launched to key metrics for monitoring shifts in investor curiosity and international utilization of cryptocurrencies. These embody bitcoin’s “whale” inhabitants, UTXO age distribution, change volumes and extra. 

The information-driven takeaways embody:

Holders of bitcoin who final transacted within the second half of 2017 held by way of the tip of 2019 regardless of rises in market value that may have made it worthwhile to promote. This means there may be investor sentiment for bitcoin as a retailer of worth moderately than as a speculative asset. The bump in bitcoin holdings that final moved in late 2018 represents a motion of property right into a safer type of storage by cryptocurrency change Coinbase in December 2018. 

Coinbase’s bitcoin-fiat markets, among the many world’s hottest for purchases of bitcoin in USD, GBP and EUR, have stalled since 2018. Based on information from Nomics, bitcoin-fiat quantity has dropped from an all-time excessive of $46.54 million in 2018 to $44.92 million in 2019. This market is primarily utilized by traders who view bitcoin as a substitute retailer of worth from conventional forex, and will be considered a barometer for buy-and-hold sentiment.  

By the tip of 2019, there have been 2,100 bitcoin addresses holding extra $8.5 million-worth of BTC every. The expansion in some of these addresses, additionally known as bitcoin “whales,” is a tough indicator of enormous investor participation in cryptocurrencies. Since 2018, the bitcoin whale inhabitants has been multiplying at charges not seen because the early 2000’s when bitcoin was buying and selling under $100 or 1/85th of its present market value.

Off-chain exercise on regulated cryptocurrency exchanges within the U.S. doesn’t present comparable indicators of elevated giant investor participation in cryptocurrencies. Cryptocurrency information supplier Skew reported a decline in quantity for each the CME and Bakkt’s bitcoin futures open curiosity markets in 2019. These markets, not like that of different in style cryptocurrency exchanges similar to Coinbase and Binance, are designed to supply institutional traders regulated devices for publicity on bitcoin. Institutional participation in cryptocurrencies could also be lagging resulting from persisting imbalances within the underlying liquidity of those property throughout varied exchanges.

One of many breakout successes of 2019 was decentralized finance (DeFi) purposes. Collectively, these decentralized apps (dapps) managed over $680 million-worth of cryptocurrencies by the tip of This autumn, in accordance with cryptocurrency information supplier DeFi Pulse. the most well-liked sub-category of DeFi, cryptocurrency lending, person traction on ethereum continued to climb even when market value for ETH began to say no. 

In different dapp classes similar to gaming and playing, the variety of purposes and customers decreased in 2019. Cryptocurrency information supplier DappRadar experiences fewer dapps and dapp customers in This autumn 2019 than Q1. “Generally, we’re seeing an increase within the high quality of dapps and over time which means fewer dapps launched and fewer dapps attracting a big viewers,” stated Jon Jordan, communications director of DappRadar. It might appear outdoors of the DeFi growth on the ethereum blockchain, different dapp platforms and use circumstances are struggling to develop. 

For extra charts and evaluation, obtain the total CoinDesk Quarterly Evaluation.