[That’s Our Two Satoshis] Crypto Market Maturing In Real Time Per New Report
Crypto Market Maturing In Real Time, Bitcoin Lows Might Be Behind Us
Bitcoin’s 5 percent gain YTD seems low compared to the S&P’s 9 percent gains and 20 percent in small-cap cryptos but the current market is really seeing maturation. Moreover, there are still a number of reasons to be bullish on the leading cryptocurrency.
According to Arca the financial services firm’s latest medium post, Bitcoin has immense growth potential as given the fact that less than 0.1 percent of the world population actually own Bitcoin and its $70 billion market cap is smaller than that of Starbucks.
Moreover, given the fact that the entire market cap of crypto is less than that of bank fines, it can be said that “change is on the way.” Also recently, we reported that Bitcoin has surpassed Paypal in annual tradition volume.
As for the Bitcoin network effect, the number of BTC addresses actively used have been up for the last seven months. The number of Bitcoin addresses holding 1 to 10 full BTC has risen 6 percent since last February, as per the Diar Research.
BitMEX Effect On Bitcoin Volatility
Recently, we reported how Rptr45 dig into one of the largest and most controversial crypto exchanges, Bitmex. The exchange has been one of the main culprits for high levels of volatility in crypto and offers up to 100x leverage.
“But during Q1 2019, the Bitmex Insurance Fund increased its BTC reserves resulting from liquidations at the lowest rate in over a year and this also corresponds to a decrease in the Bitmex Funding Rate.”
Bitmex doesn’t charge any interest on funding rather the funding rate is exchanged directly P2P and is based on the notional value of the trader’s position which means the greater the position’s notional value, the higher the Funding Rate. Hence, this reduction in Bitmex leverage corresponds to a reduction in BVOL (annualized Bitcoin volatility).
What increases the Bitcoin volatility is when a trader with 100x leverage takes a long position but the market moves down, then Bitmex forcefully liquidates this long position by selling a 100 BTC at a market price that has a substantial effect on price volatility.
Now, that larger and frequent drops in price are becoming less frequent, people are turning bullish, “As volatility drops, confidence is restored, positions get larger, and time horizons expand.”
This indicates increasing chances that the lows in BItcoin price just might be behind us, after all.
Meanwhile, the small-cap crypto rally has been showing fundamental strength. Though a full-blown alt rally is yet to come, a number of trends regarding the surge in Binance Coin, Enjin coin and BAT point towards maturity and overall market health.
As the bear market rally wears off, the author says equities are “starting to lose steam.” While US equities remain unfavorable, crypto is gaining momentum on real adoption and the one-off trends in tokens being applicable to the broader industry.