Deepdive into the crypto markets - January 2021
2021-01-21
The markets have during the past month or two been steaming. However, this market differs from the earlier “bull runs” we saw since this one seems to be primarily driven by institutional investors. While the 2017 bull run was primarily focused on retail investors speculating on the fact that institutional investors “will come soon!”. When the market realised that that was not the case, that “bubble” collapsed.
Now, four years and one bitcoin halving or so later, the institutional investors are in fact here. And here to stay we believe. We see giants like Mass Mutual, Paypal and MicroStrategy entering the industry and every other week you read about the next institution that is reviewing the space or fund being created.
The crypto market
The first thing that is in order is to congratulate all the ether holders out there. Ether reached an all-time high of above 1400 USD or about 12.000 SEK per ether!
Additionally, The last 365 days have taken bitcoin from about 10k USD / bitcoin to about 36k USD / bitcoin.
Source: CoinMarketCap
Bitcoin and the traditional industry
Bitcoin continues to climb the ladder of relevance by passing the bitcoin sceptic Warren Buffets Berkshire Hathaway and are now looking to pass (the just reapering) Jack Mas Alibaba.
Source: 8marketcap
Bitcoin and other cryptocurrencies
Bitcoin market dominance, even with the price rise, continues to fall over time. This indicates that the industry is growing at a pace that is even more rapid than the astonishing pace bitcoin is growing at. Not a bad feat..
Source: CoinMarketCap
Education
“DeFi”, or Decentralised FInance is the latest hot topic in the industry. But what is it exactly? Here follows a short description of what one of its components is, namely “yield farming” in DeFi. What is Yield Farming?
This month most impactful news
Bitcoin Goes Institutional, Ethereum Spreads Its Wings: CoinDesk Q4 2020 Review
Grayscale Holds Over 3% of Bitcoin, Sees Pension Interest
As Musk’s Net Worth Nears Bezos’, Tesla Will Beat Bitcoin To $1 Trillion Market Cap
Other interesting data
Hashrate continues to increase steadily. This is a sign that the industry is maturing and that we continue to see a demand for securing the bitcoin protocol in both good and bad financial market conditions. Hashrate is measured in hashes per second and is how many calculations that the miners securing the bitcoin network performs to secure it. The higher the number, the more secure the network.
Miners revenue have now reached the same level as they did in the peak of 2017. This is important to make sure that the miners are in profit so that they can invest in more hardware and pay their electricity bills for the future security of the network. On a longer spectrum, fees paid to miners have to completely compensate for the current subsidy that is being given to the miners with each block reward.
Fees for transactions on the bitcoin network continues to increase at about the same rate as the price of bitcoin. For those planning to use bitcoin now or in the future, perhaps not waiting too long os a good strategy due to the block space limit and the sudden spike in demand that can happen for bitcoin transactions.
