Bitcoin, DeFi, Crypto Long & Short, Newsletters, Institutional Adoption, Year in Review 2020

The first Crypto Long & Short of 2021 has a different format: Instead of the usual article, I’ve asked some leading industry analysts – from Kaiko, IntoTheBlock, skew.com and Arcane Crypto – to share their favorite charts with you. The depth and quality of metrics available to market observers has grown by leaps and bounds this year, and the work of these analysts and others goes a long way toward helping investors to not only understand the crypto ecosystem better, but also to appreciate how different and fascinating the assets and their markets are. Click on the below links to find out more about these analysts’ work and the data they offer. 

(You can see more of Kaiko’s and Arcane Crypto’s work in our Research Hub.)

Clara Medalie, Business Development and Strategy at Kaiko

The March market crash will go down in history as one of the steepest and most rapid sell-offs to ever sweep cryptocurrency markets. Over the course of an hour, bitcoin‘s price plummeted thousands of dollars and order book liquidity all but evaporated. This chart shows the sum of all bids and asks placed on Coinbase’s BTC-USD order book before, during and after the first price crash. We can observe that when the crash began around 10:30am, the quantity of orders surrounding the midprice plummeted, forcing a liquidity crisis that perpetuated the steep fall in price.

This chart is one of my favorites because it demonstrates the important role that market makers play in creating and maintaining liquidity in cryptocurrency markets. Ultimately, the March crash proved that the price of an asset is often less a reflection of the “true value at a point in time assigned through the process of market-based price discovery†and more a product of relentless feedback loops triggered by automatic liquidations and decimated order book depth. As cryptocurrency markets mature and order book liquidity improves, we can expect the magnitude and frequency of such price crashes to decrease.

Bitcoin, DeFi, Crypto Long & Short, Newsletters, Institutional Adoption, Year in Review 2020
Source: Kaiko

Lucas Outumuro, Senior Analyst at IntoTheBlock

IntoTheBlock categorizes on-chain transfers of over $100,000 as “large transactions.†The aggregate volume in large transactions serves as a proxy to institutional investors’ and high net worth individuals’ transaction activity.

Large transaction volume for Bitcoin has grown considerably in 2020 along with institutional interest. Comparing the average large transaction volume on the Bitcoin blockchain for December 2020 relative to December 2019, we observe it has more than quadrupled from an average of $7 billion per day to over $30 billion.

Bitcoin, DeFi, Crypto Long & Short, Newsletters, Institutional Adoption, Year in Review 2020
Source: IntoTheBlock

Emmanuel Goh, CEO of skew.com

In 2020, institutions finally embraced bitcoin but not always in the way one would expect. For instance, sophisticated investors such as hedge funds have been looking at capturing spreads by looking at the inefficiencies of this nascent market. This has translated in particular to leveraged funds positioning of CME bitcoin futures making new record shorts almost on a weekly basis in the last quarter of 2020.

Bitcoin, DeFi, Crypto Long & Short, Newsletters, Institutional Adoption, Year in Review 2020
Source: skew.com

Bendik Norheim Schei, Head of Research at Arcane Crypto

The DeFi sector saw moderate adoption during the first half of the year, with lending protocols dominating the space. At the time, the total value locked in DeFi was relatively stable, for the most part ranging between $700m and $1 billion. Then, on June 16, Compound launched its governance token. The interest in the sector then exploded (quite literally), as yield farming attracted many new participants into the space.

  • The total value locked in DeFi has increased from $670m to $14.5B in 2020, a growth of 2100%.
  • By December, 1 million unique addresses were affiliated with DeFi, a 10x growth from January. Both lending platforms and decentralized exchanges (DEXes) have seen particularly strong growth this year, while derivatives platforms have seen a more moderate (albeit strong) growth.

2021 prediction: DeFi derivatives platforms will see a more substantial growth, with stricter regulations on the centralized derivatives market leading traders to alternative markets.

Bitcoin, DeFi, Crypto Long & Short, Newsletters, Institutional Adoption, Year in Review 2020
Source: Arcane Crypto

Anyone know what’s going on yet?

Instead of trying to recap the annual or even the weekly performance in macro markets (because many will have done that in much more depth and with more perspective than I could), I’ll leave you with an awesome summary overheard coming from the mouth of a particularly observant kid, when asked how he would sum up 2020:

“It’s like when you have to cross the road, and you carefully look to the right and then to the left, and then you get run over by a submarine.â€

I will, however, share with you our usual chart of relative performances, because, well …

Bitcoin, DeFi, Crypto Long & Short, Newsletters, Institutional Adoption, Year in Review 2020

For an insightful rundown of bitcoin market developments in 2020, check out my colleague Bradley Keoun’s piece.

CHAIN LINKS

Anthony Scaramucci’s SkyBridge Capital has already invested $182 million in bitcoin. TAKEAWAY: The bitcoin fund’s brochure lists increasing adoption, lower risk, low interest rates and “unprecedented money printing†as some of the main reasons for bitcoin’s growing respectability. A quote from the brochure: “Bitcoin is digital gold. It is better at being gold than gold.â€

BlackRock is seeking to hire a vice president to help build demand for the company’s crypto-related offerings. TAKEAWAY: The gotcha here is that BlackRock is planning crypto products! That would definitely signal mainstream institutional acceptance – it’s unlikely that BlackRock would take this step unless it had already seen some demand.

Fund manager VanEck has submitted an application to the U.S. Securities and Exchange Commission (SEC) for a bitcoin exchange-traded fund. TAKEAWAY: VanEck has previously and unsuccessfully proposed ETFs, withdrawing its most recent application in September 2019. This latest attempt signals that the firm believes the environment is more favorable now 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 exchange by open interest, which reached $1.66 billion. TAKEAWAY: This is, in my view, the clearest signal that institutional interest in bitcoin is growing. At the beginning of 2020, the CME bitcoin futures open interest ranked fifth, well behind BitMEX, OKEx and Huobi. The daily volumes in the CME’s bitcoin futures, however, are well below the exchange’s Asian counterparts, which implies less trading and more strategic positioning than in crypto derivative exchanges outside the U.S.

Bitcoin, DeFi, Crypto Long & Short, Newsletters, Institutional Adoption, Year in Review 2020
Source: skew.com

Gazpromneft, the oil subsidiary of Russia’s natural gas giant Gazprom, has opened a venue for cryptocurrency mining on one of its oil drilling sites in Siberia. TAKEAWAY: So many threads to pull on here: 1) oil and gas producers seeing cryptocurrency mining as a diversification source; 2) the geographical spread of crypto mining activity; 3) Gazprom is a state-owned enterprise, getting involved (albeit indirectly) 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.†TAKEAWAY: This is not as big a bet as MicroStrategy (MSTR) has made this year, since this amount is only approximately 15% of the available cash on hand at the end of Q3. The firm’s CEO said that he sees bitcoin as having more long-term appreciation potential than simply holding cash. We will most likely see more announcements like this over the coming months.

National Football League player Russell Okung will get half of his $13 million annual salary in bitcoin, via crypto startup Zap, whose Strike product enables traditional paychecks to be converted to bitcoin. TAKEAWAY: Apart from the high-profile publicity this gives bitcoin (and we are likely to see more athletes making crypto-related announcements over the coming months), it is also a sign of the widening breadth of products for a market beyond institutions. According to Zap’s CEO, Strike can now be used as a checking account through partnerships with two yet-to-be-named banks. What’s more, Okung’s advocacy for bitcoin is not news – he launched the bitcoinis project which writes and hosts meetups about cryptocurrency – so we can expect to see more buzz-generating public comments next year.

For those of us working in the industry, it’s been fun in a smug sort of way watching the number of declarations of bitcoin’s failure and imminent death. The website 99bitcoins.com has tracked bitcoin “obituaries,†and now shows that cynics are flagging. TAKEAWAY: This is understandable since bitcoin has weathered a few winters and market slumps. It’s also a pity, since an overlooked benefit of criticism is that it forces us to improve our explanations. There is still a lot of education to do; but it seems that there is now more career risk in dissing bitcoin than in suggesting that clients invest.

Bitcoin, DeFi, Crypto Long & Short, Newsletters, Institutional Adoption, Year in Review 2020
Source: 99Bitcoins, CoinDesk Research

The Ripple suit: The list of crypto platforms dropping XRP in the light of the SEC’s suit continues to grow, with Coinbase, Binance US, Genesis, OKCoin, Crypto.com and eToro USA joining the ranks. This week brought a twist to the tale, as a Coinbase client brought suit against the exchange for knowingly selling XRP as an unregistered security and pocketing the commission.

Du lịch nhật bản, hướng dẫn du lịch Nhật và đánh giá địa điểm Nhật Bản Japan travel news, japan travel guides, japan holiday destinations and japan reviews

RELATED NEWS

Mystery Whale Returns by Moving $35 Million — Miner Transfers 1,000 ‘Sleeping Bitcoins’ from 2010

Two months after the mystery mining whale from 2010 transferred a string of 20 block rewards with 1,000 bitcoin on March 23, it seemed as though the entity was finished, after spending 10,000 bitcoin total. However, it took 78 days for the whale’s next move, as another 20 blocks from 2010 were transferred on Wednesday […]

Xem chi tiết: Mystery Whale Returns by Moving $35 Million — Miner Transfers 1,000 ‘Sleeping Bitcoins’ from 2010

Commodity Strategist Mike McGlone Says $40K BTC Target ‘More Likely’ Than $20K

Bloomberg Intelligence senior commodity strategist Mike McGlone believes bitcoin is “more likely†headed for $40K instead of $20K after discussing the possibility of capitulation in a recent tweet. McGlone’s opinion follows a number of predictions that say bitcoin could drop to the $20K zone if there’s more pullback in the cards. Bloomberg Commodity Strategist Suggests […]

Xem chi tiết: Commodity Strategist Mike McGlone Says $40K BTC Target ‘More Likely’ Than $20K

Crypto Payments App Bottlepay Is Now Available Across Europe

U.K.-based crypto payments provider Bottlepay has started offering services in other European countries. Users on the Old Continent will be able to send and receive even small amounts of euro and also buy, store and spend bitcoin with merchants accepting cryptocurrency. Bottlepay Promises Low-Cost Transactions in Euro and Bitcoin The Bottlepay app will allow Europeans […]

Xem chi tiết: Crypto Payments App Bottlepay Is Now Available Across Europe

Mike Novogratz: Bitcoin Investors Waiting for a New Narrative Shift

Mike Novogratz declared institutional investors are waiting for the next narrative shift in a recent interview at the Bitcoin 2021 conference in Miami. The CEO of Galaxy Digital thinks the market is now in a consolidation phase after the price crash last month. Novogratz also commented on what the rise of defi could mean for […]

Xem chi tiết: Mike Novogratz: Bitcoin Investors Waiting for a New Narrative Shift

NYAG Court Order to Shut Down Coinseed Succeeds, CEO Creates Profanity Token for Attorney General

The crypto trading platform Coinseed is shutting down operations according to a written statement from the company’s CEO Delgerdalai Davaasambuu. A court order secured by New York Attorney General Letitia James told Coinseed to halt all of its operations. Following the announcement of the shutdown, Coinseed’s CEO said he created an ERC20 token called “FLJ†[…]

Xem chi tiết: NYAG Court Order to Shut Down Coinseed Succeeds, CEO Creates Profanity Token for Attorney General

Grand Theft Auto 6 to Feature a Fictional Cryptocurrency

One of the biggest franchises in the videogame industry, Grand Theft Auto, will feature in-game payments of “bitcoin†or another fictional cryptocurrency. Contractors will pay the player with this currency when they need to make anonymous, untraceable payments. This would constitute another push for Bitcoin awareness into mainstream media culture. Grand Theft Auto 6 to […]

Xem chi tiết: Grand Theft Auto 6 to Feature a Fictional Cryptocurrency

Amazon Job Listing Seeks Blockchain Lead – Internet Giant Looks to Create ‘Business Use Cases Across Defi’

Amazon is looking for a blockchain expert, according to a job posting published on the company’s employment portal. The firm wants someone who is “passionate about blockchain and decentralized networks†and someone who can build innovative “business use cases†across decentralized finance (defi). Online Marketplace Amazon Hopes to Hire a Head of Product to Lead […]

Xem chi tiết: Amazon Job Listing Seeks Blockchain Lead – Internet Giant Looks to Create ‘Business Use Cases Across Defi’

Bitcoin Keys Cannot be Hacked: Skeptics Question the Official Colonial Pipeline Bitcoin Seizure Story

On June 7, the United States Justice Department and the Federal Bureau of Investigation (FBI) announced the “recovery†of 63.70 bitcoin from the funds Colonial Pipeline sent to the hackers. The official story has a number of inconsistencies and federal investigators did not disclose how the FBI was able to confiscate the Darkside gang’s private […]

Xem chi tiết: Bitcoin Keys Cannot be Hacked: Skeptics Question the Official Colonial Pipeline Bitcoin Seizure Story

Alternative 401(k) Product Offers In-Plan Cryptocurrency Investment via Coinbase Institutional

El Salvador Offers No Capital Gains Tax, Permanent Residence to Crypto Entrepreneurs

White House Tech Advisor Tim Wu Keeps at Least $1 Million in Bitcoin

White House Tech Advisor Tim Wu Keeps at Least $1 Million in Bitcoin

Alternative 401(k) Product Offers In-Plan Cryptocurrency Investment via Coinbase Institutional

Scammers Pick Bank Transfers Over Cryptocurrency, Australian Report Reveals

As Crypto Interest Winds Down Bitcoin’s Daily Transaction Rate Plummets to Two-Year Lows

FBI Agent Recovers Private Key to $2.3M in Bitcoin Paid to Colonial Pipeline Hackers