The first Crypto Long & Short of 2021 has a different format: instead of the usual article, I asked some leading industry analysts – from Kaiko, IntoTheBlock, skew.com and Arcane Crypto – to share their favorite cards with you. The depth and quality of the benchmarks available to market observers has grown exponentially this year, and the work of these analysts and others is working hard to help investors not only better understand the crypto-ecosystem, but also to to see how different and fascinating the assets and their markets are. Click on the links below to learn more about the work of these analysts and the data they provide.
Clara Medal, Business Development and Strategy at Kaiko
The March crash will go down in history as one of the steepest and fastest sell-offs the cryptocurrency market has ever had. Over the course of an hour, bitcoin’s price dropped thousands of dollars and the order book’s liquidity evaporated. This graph shows the sum of all bids and requests placed in Coinbase’s BTC-USD order book, before, during and after the first prize crash. We can see that when the crash started around 10:30, the volume of orders dropped around the middle price, forcing a liquidity crisis that allowed the strong fall in the price to continue.
This chart is one of my favorites because it shows the important role that market makers play in creating and maintaining liquidity in cryptocurrency markets. Finally, the collapse in March proved that the price of an asset often reflects less of the “true value at a time allotted through the process of pricing in the market” and more a product of relentless feedback loops caused by automatic liquidations. and abbreviated order book depth. As the cryptocurrency markets decline and the liquidity of the order book improves, we can expect the extent and frequency of such price accidents to decrease.
Lucas Outumuro, senior analyst at IntoTheBlock
IntoTheBlock categorizes chain transfers of more than $ 100,000 as ‘big deals’. The total volume in large transactions serves as a proxy for the transaction activities of institutional investors and individuals with a high net worth.
The large transaction volume for Bitcoin has grown significantly in 2020, coupled with institutional interest. If we compare the average large transaction volume on the Bitcoin blockchain for December 2020 compared to December 2019, we see that it has more than quadrupled from an average of $ 7 billion per day to more than $ 30 billion.
Emmanuel Goh, CEO of skew.com
In 2020, institutions finally adopted bitcoin, but not always as you would expect. Sophisticated investors such as hedge funds, for example, have looked at the spread of spreads by looking at the inefficiency of this emerging market. This has especially translated into the position of leverage funds of CME bitcoin futures contracts that made new weekly record highs in the last quarter of 2020.
Bendik Norheim Schei, Head of Research at Arcane Crypto
The DeFi sector had moderate acceptance during the first half of the year, with lending protocols dominating the space. At the time, the total value locked up in DeFi was relatively stable, mostly between $ 700 million and $ 1 billion. Then, on June 16, Compound launched its management token. Interest in the sector then (literally) exploded, as yield farming attracted many new entrants into the space.
- The total value that DeFi has locked up has risen from $ 670 million to $ 14.5 billion in 2020, a growth of 2100%.
- By December, 1 million unique addresses were connected to DeFi, a tenfold increase from January. Both lending platforms and decentralized exchanges (DEXs) have shown particularly strong growth this year, while derivative platforms are experiencing slower (albeit strong) growth.
2021 forecast: DeFi-derived platforms will see more significant growth, with stricter regulations on the centralized derivatives market leading traders to alternative markets.
Does anyone know what else is going on?
Instead of trying to summarize the annual or even the weekly performance in macro markets (because many would do so much more profoundly and with more perspective than I could), let me give you a wonderful summary that comes from the mouth of ‘ a particularly observant child, when asked how he would sum up 2020:
“It’s like when you have to cross the road, and you look carefully to the right and then to the left, and then you are overtaken by a submarine.”
However, I will share our usual graph of relative performance with you, because …
For an informative overview of development of the bitcoin market in 2020, look at my colleague Bradley Keoun’s piece.
CHAIN LINKS
Anthony Scaramucci’s SkyBridge Capital has already invested $ 182 million in bitcoin. TAKE AWAY: The bitcoin fund brochure mentions increasing adoption, lower risk, low interest rates and ‘unprecedented money pressure’ as some of the main reasons for bitcoin’s increasing respect. A quote from the brochure: “Bitcoin is digital gold. It is better to be gold than gold. ”
BlackRock wants to hire a vice president to increase the demand for crypto-related offerings from the company. TAKE AWAY: The gotcha here is that BlackRock plan crypto products! That would certainly indicate the general institution’s acceptance – it’s unlikely that BlackRock would take this step unless he’s already seen some question.
Fund Manager VanEck has filed an application with the U.S. Securities and Exchange Commission (SEC) for a bitcoin exchange-traded fund. TAKE AWAY: VanEck has proposed ETFs before and unsuccessfully, and withdrew its most recent application in September 2019. This latest attempt indicates that the firm believes that the environment is now more favorable than in the recent past, and we are likely to see other ETF managers submit further proposals in the coming months.
Earlier this week, the Chicago Mercantile Exchange (CME) was briefly the largest bitcoin futures contract with public interest, reaching $ 1.66 billion. TAKE AWAY: In my opinion, this is the clearest signal that institutional interest in bitcoin is growing. At the beginning of 2020, the CME bitcoin futures ranked fifth, far behind BitMEX, OKEx and Huobi. However, the daily volumes in the bitcoin futures contract of the CME are far below the Asian counterparts of the stock market, implying less trading and more strategic positioning than in crypto-derivative exchanges outside the US.
Gazpromneft, the oil subsidiary of the Russian natural gas giant Gazprom, has opened a site for cryptocurrency mining on one of its oil drilling sites in Siberia. TAKE AWAY: So many threads to draw here: 1) oil and gas producers who view cryptocurrency mining as a source of diversification; 2) the geographical distribution of cryptocurrency mining activities; 3) Gazprom is a state property enterprise, (albeit indirectly) engaging in cryptocurrency mining.
Canadian augmented reality (AR) company NexTech AR (NTAR) plans to use its treasury funds to buy $ 2 million worth of bitcoin for ‘capital diversification’. TAKE AWAY: This is not such a bet as MicroStrategy (MSTR) made this year, as this amount is only about 15% of the available cash at the end of the third quarter. The firm’s CEO said he sees bitcoin as more potential in the long run than just cash. We will most likely see more announcements like this over the coming months.
National Soccer League Player Russell Okung will receive half of its $ 13 million annual salary in bitcoin, via the crypto-startup Zap, whose Strike product makes it possible to convert traditional salaries into bitcoin. TAKE AWAY: Aside from the sensational publicity it offers bitcoin (and we’ll probably see more athletes making crypto-related announcements over the coming months), it’s also a sign of the growing breadth of products for a market outside institutions. According to Zap’s CEO, Strike can now be used as a checking account by partnerships with two banks not yet named. What’s more, Okung’s advocate for bitcoin is not news – he has launched the bitcoinis project that writes and hosts meetings on cryptocurrency, so we can expect to make more public comments next year.
For those of us working in the industry, it was nice to look at the number of explanations for bitcoin’s failure and impending death in a complacent way. The website 99bitcoins.com has tracked down bitcoin “obituaries,” and now show that cynics flag. TAKE AWAY: This is understandable, as bitcoin has endured some winters and market slumps. This is also unfortunate because the benefit of criticism is that it forces us to improve our explanations. There is still a lot of training to do; but there now seems to be more career risk to disrupt bitcoin than to suggest that customers invest.
The Ripple suit: The list of crypto platforms that drop XRP in light of the SEC suit continues to grow, with Coinbase, Binance US, Genesis, OKCoin, Crypto.com and eToro USA joining the ranks. This week, the story took a turn as a Coinbase client filed a lawsuit against the exchange for knowingly selling XRP as an unregistered security and pocketing the commission.