As we’re nearing the end of the year, it’s obvious that 2017 was the biggest high for cryptocurrencies for now. In 2018 the cryptocurrency industry slowed down, but the best is yet to come. In 2018, during a 69% correction, as little as 25% of all Bitcoins were moved between wallet addresses. This would suggest that roughly around 75% of Bitcoins haven’t changed owners. When we compare the data with last year, we can see a staggering 58% decline in BTC user activity. A little over a year ago, Bitcoin reached the famous all-time record of $20 000 and the market cap was a little over $800 billion.
Almost all experts were unanimous in their prediction that a bear market was coming. The bear market came and although some analysts were predicting a bigger percentage of Bitcoin swapping owners, they were proven wrong. Of course the huge influx of investors, which entered the market through alternative platforms like the CBOE and CME Bitcoin futures markets have some impact on that outcome. Also exchange wallets own a large percentage of Bitcoins so any activity that happenes in the exchanges isn’t shown in the recent statistics.
Despite the Bear Market, the best is yet to come for Bitcoin
Next month, there are few promising developments, which will most likely futher increase the overall crypto user activity. Bankkt Bitcoin futures market will most likely launch in December. Morgan Stanly and Goldman Sachs crypto derivate products are also expected to grow the liquidity of the stagnant cryptocurrency market.
The noticeable user activity decline has a simple explanation: Bitcoin is in a recession. If we take a look at the current market data, we could see that roughly 30% of the bitcoin in circulation is available to the public. The availability is also only through crypto exchanges. That being said, the majority of investors are holding to their bitcoins as a long-term investment.
Despite being in a bear market, crypto trading isn’t slowing down. According to crypto market data providers, the daily trading volume of bitcoin is roughly around $4 billion. At the beginning of the year, in Japan and South Korea, daily trading volumes peaked at $10 billion. This effectively means that Bitcoin does not have a liquidity issue. Due to the large daily trading volume, every investor who seeks to liquidate an entire position is more than able to in a few minutes.
The year wasn’t pretty for Bitcoin, especially compared to 2017. With one of the worst corrections in recent years and the 4th-worst crash in the past 9 years, things can go upwards from here. If investors are willing to hold on their bitcoins despite all the developments of this year, this signals extreme confidence towards the long-term investment nature of cryptocurrencies.