2019-2020 Cryptocurrency Market Annual Report | Chapter 1: Returning Consensus (I)


Feb 24

摘要: From an overall global digital currency market value perspective, late June of 2019 was an exciting month for cryptocurrencies as price level reached the peak. For instance, the price of Bitcoin crossed USD 10,000(22 June), USD 14,000 (26 June), and USD 13,796.49(26 June) all in one month.

Looking back at 2019, fluctuations of the digital currency market brought worries and anxieties to investors who still wait for a dawn-breaking moment. The overall market value of global digital currency rose by 53.35%. Mainstream digital currencies are on the rise among which BTC had the best performance with a 90.48% growth while ETH dropped by 5.42%.

2019 was the year of becoming normal again after the blockchain insanity in 2017 and the winter for the industry in 2018. In 2019, the blockchain industry has seen less bubbles but more about returning to the norm through investing limited efforts and funds into technological exploration and application.

After few months of following and analyzing the cryptocurrency market, the 2019-2020 Cryptocurrency Market Annual Report: Return of Consensus has been finished. The thinktank of ChainDD has gathered, processed and analyzed over 200 thousand sources in the cryptocurrency industry globally with ChainDD Index, selected 50 mainstream digital currency transaction pairs in the major cryptocurrency exchanges, and calculated with weighted arithmetic means to obtain indexes that reflect the trends of the market.

The annual report consists of six sections, including global cryptocurrency industry, market value of the Top 30 cryptocurrencies, blockchain application in the financial field, updates of blockchain-related policies around the globe, status quo of the mining and Dapp, to review, list and analyze the development and ecology of the global blockchain in 2019.

ChainDD Thinktank believes that, the proportion of Bitcoin’s market value has grown more after its over 60% increase. The more proportion it has, the worse the side effects it will see. After the bear market in the blockchain market, investors, both institutions and individuals, become less passionate about the Ethereum’s ICO and more likely to invest in Bitcoin that enjoys higher consensus.

Based on the blockchain regulation policies around the world in 2019, license for activities involving cryptocurrency is a supervisory focus. Taxation and policies to combat money laundry in transactions involving digital currency are improving; countries, whether with neutral or negative opinions towards blockchain, are holding more positive views toward this new technology; more attention has been paid to cryptocurrency activities supervision; an increasing number of central banks in different countries start to step up R&D of their own digital currencies after the launch of Libra and other stable coins.

De.Fi and its relevant projects have attracted much attention since 2019. One reason is the brand new experience brought by financial means that differs from decentralized scenarios; the other one is because of the huge flow of fund led by these projects. So far, the fast-growing De.Fi market can be classified as loan, stablecoin, trading exchange, deviant and payment method.

The mining capacity of Bitcoin and the income of miners continues to increase but the interests from mining have been reducing. According to statistics, it took 8 years for the overall income of Bitcoin mining to first surpassed USD 5 billion. After the total Bitcoin mining revenue reached USD 10 billion in August last year, the income growth slowed down. However, it is still very likely to exceed USD 15 billion at the beginning of 2020.

With policy improvement, technological development and application, blockchain will embrace stronger consensus in the year 2020. The industry will see fewer speculators but more investors that have faith in this technology. This year, Bitcoin and Bitcoin forks are still appealing to investors in the cryptocurrency market but will face shrinking demands at the same time.

This 2019 annual report will present a direct review, reliable industry statistics and trends for investors and practitioners in the global blockchain market.

Chapter 1: Returning consensus: 2019 Global Cryptocurrency Market (I)

By 5 January 2020, there are 4993 types of digital currency globally and the total market value is USD 199.768 billion. The digital currency market has seen a USD 74.06 billion growth, a year-on-year increase of 58.91%, compared to the total market value at the beginning of 2019 (USD 125.708 billion).

1. Reviewing digital currency market in 2019: dramatic fluctuation in the middle of the year and an overall yearly increase of 53.35%

According to the DDCI, last June and July had witnessed the most dramatic fluctuation in the market though growth had been noticed at the end of the year. DDCI is a market index launched by ChainDD with in-depth analyses of top 50 cryptocurrency exchanges and top 50 kinds of digital currency. The index consists of overall index, BTC index and ETH index which reflexes global market trends of digital currency within a specific period of time.

From an overall global digital currency market value perspective, late June of 2019 was an exciting month for cryptocurrencies as price level reached the peak. For instance, the price of Bitcoin crossed USD 10,000(22 June), USD 14,000 (26 June), and USD 13,796.49(26 June) all in one month. As the prices of Bitcoin soaring, the total value of global digital currency market peaked at USD 386.348 billion dollars, which was a 207.34% growth compared to that on 1 January 2019 (USD 125.708 billion). It finally went back to the same price level in mid-March 2018.

In the first four months of 2019, the digital currency market was recovering without much market turbulence. The price of Bitcoin first rocketed past USD 5,000 around 18:30, 12 April (Beijing Time) and fluctuated between USD 4,800 to 5,300 until 20 April.

In March, Bitcoin started to reach new highest value at that time and enjoyed an increasing momentum since the middle of the month, exceeding USD 6,000, USD 7,000, and USD 8,000. On 23 March, the first and largest digital currency skyrocketed again up to USD 9,000 but soon decreased. With the dramatic price changes of Bitcoin, the global digital currency market value rose up to USD 286.55 billion, the same level as that in June 2018.

June and July witnessed the most extreme market turbulence. The price of Bitcoin fell after surpassing USD 13,000 in June but soared past USD 13,000 again in July with a slight decrease later. But since then, the market value plummeted in the rest of the year.

The bear market lasted two months after July. The watershed was in October. At 8 pm on 23 October, the unsatisfactory results of the Facebook cryptocurrency project Libra in the US hearing led to a slight decline in the market, as low as USD 203.282 billion. However, on 25 October, the Chinese government announced to use blockchain as an important breakthrough in independent innovation, bring the industry a bull market for a while. In the next morning, the total market value of the global digital currency market rose up to USD 262.338 billion, a total increase of 29.05% within two days.

Digital currency market value began to reduce after mid-November, lower than the price level of October. In December, the market value of Bitcoin dropped to USD 6,600 but bounced back later. In the midnight of 31 December, the total market value of digital currency around the world was USD 192.769 billion, a 53.35% increase in 2019.

2. Annual trend of major digital currencies: high market share of BTC

We have reviewed major cryptocurrencies of 2018 including BTC, ETH, BCH, BSV, LTC and EOS in terms of prices and transaction volume.

Mainstream cryptocurrencies had a favorable momentum in 2019. BTC showed the best performance with a 90.48% growth while ETH decreased by 5.42%.

After the bear market, institutions and individual investors prefer to investing Bitcoin for its largest user base and relatively stable price among all digital currencies.

The price of Bitcoin started to rise from USD 4,000 in early April to USD 5,300 in a month’s time. According to the analysis of ChainDD Thinktank, this round of price growth may be triggered by three large exchanges—Coinbase, Kraken and Bitstamp whose value was estimated at around USD 100 million. Before the skyrocketing of the price, the number of transactions on the BTC chain reached the peak of transaction volume at the end of 2017.

On the evening of May 13, China announced that some 10%, 15%, and 25% tariffs would be imposed on more than 4,500 types of US goods, while 5% tariffs would still be imposed on over 500 remaining products. After this, investors began to change their portfolios and invest in various types of risk aversion funds. The price of bitcoin broke through USD 8,300 and rose up to USD14,000.

ChainDD also finds that the global financial market started to face a serious drop on 13 May since the trade war, which led to a major drawdown of American stock market. Therefore, investors pulled backs from the market for risk avoidance and treasury bonds, Japanese, Gold and Bitcoin began to have higher values. Three major US stock indexes dropped over 2% and the NASDAQ index even fell by 3% while VIX radically increased by 30%. The US treasury bond with a 10-year benchmark continued to soar in price and plummeted in the interest rate that was even down to 2.4%. The gold price nearly climbed to USD 130 per ounce. Meanwhile, over USD 14 billion drew back from the US stock market, the worst time since January of 2019. But Bitcoin price, which increased by 15% within 24 hours, hit USD 8,300.

It is noteworthy that when the price of Bitcoin reached USD 14,000 in 2017, Ethereum came second with the price of only USD 500-700; Last year, while the price of Bitcoin returned to USD 14,000, the price of Ethereum was only around USD 360.

After analyses, we believe this round of investment was mostly done by large financial institutions with an emphasis on Bitcoin. By the end of May, Grayscale announced that the asset management scale of their cryptocurrency trust reached USD 2.1 billion among which Bitcoin assets valued at USD 1.9712 billion accounted for the largest proportion. Meanwhile, more funds went to Bitcoin instead of other major cryptocurrencies or copycat coins, as investors had less interest in ICO of Ethereum and more consensus on Bitcoin.  

According to Binance, despite withdraws occurred in the last few days of the second quarter, the cryptocurrency market still saw the most dramatic price soaring after the bullish market at the end of 2017. Interestingly, the average correlation between Bitcoin and other major cryptocurrencies decreased drastically which implies the flight-to-quality behavior of investors at the beginning of the bullish market, which could possibly continue to go down when the market value ratio of Bitcoin kept growing. Similar scenarios were seen in the bullish market in 2015.






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