The Changing Dynamics of Cryptos

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ght be moving towards becoming more of a storage of value than a medium of exchange as hodlers rise to an all-time high.</p><figure id="a41b"><img src="https://cdn-images-1.readmedium.com/v2/resize:fit:800/1*0zIxlSYFk_bALLh4fLBTwQ.png"><figcaption>Figure 3</figcaption></figure><p id="9858">The second chart compares the BTC untouched supply for the past six months, one year & two years to the actual price of bitcoin in US Dollars, shown on a log scale (Figure 3). Two trends emerge from this comparison as well. First, the price BTC supply mirrors the prices movements in the digital assets with the six months supply being the closest.</p><p id="4603">Second, and more importantly, is an inverse relationship between the BTC supply (hodlers) & the price movement. The supply peaks towards a price trough & vice versa. This resilience of hodlers to hold on to their BTC on every price correction has perhaps given it the price stability which we have seen recently. This relationship lays is the foundation stone of hodling.</p><p id="80fb">And finally, we see the detached price movements of the Alt. coins from Bitcoin. Traditionally, the general crypto market has moved in the same direction as Bitcoin, posting identical gains or losses. These past few weeks, however, have seen a delinking of this relationship.</p><p id="7b6f">Bitcoin saw two identical peaks — one in late June (~ $13,800) & another one in early July (~$ 13,000). Alt. coins, on the other hand, saw much smaller gains with every BTC bounce & much steeper declines with every BTC correction.</p><figure id="c755"><img src="https://cdn-images-1.readmedium.com/v2/resize:fit:800/1*BILFSaH2nTyHkCE_AANoxQ.png"><figcaption>Figure 4</figcaption></figure><p id="beab">Keeping in mind the study period of this report, Bitcoin has remained relatively steady with a 2% decline with most of the Alt. coins posting double-digit losses (Figure 4) — EOS (-44%), Cosmos (-41%), Cardano (-37%), IOTA (-36%), Dash (-35%), Bitcoin Cash (-34%), Litecoin (-32%) and Ripple & NEO (both -31%) were notable among the decliners. The losses highlight how most digital assets have given up most of their gains recorded earlier this year.</p><p id="b58e">Heightened geopolitical tensions, fear of a global economic slowdown in light of the trade wars & Facebook’s Libra coming under intense regulatory scrutiny have all contribu

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ted towards the recent weakness in general cryptos. Bitcoin has so far been able to hold its own with these headwinds since it is being increasingly seen as a store of value and hedge in uncertain times.</p><p id="46ac">A strong correlation between Bitcoin & Gold right now is vouching for this fact as well. Also, Bitcoin seems to be the only digital assets with any kind regulatory clarity and mainstream adoption. The bigger question is perhaps… Will this last?</p><p id="3ad1"><a href="mailto:[email protected]?source=post_page---------------------------">Email</a>📭| <a href="https://twitter.com/fklivestolearn?source=post_page---------------------------">Twitter</a>📜 | <a href="https://www.linkedin.com/in/faisal-khan-2a3009b/?source=post_page---------------------------">LinkedIn</a>📑| <a href="https://stocktwits.com/trade_nut?source=post_page---------------------------">StockTwits</a>📉 | <a href="https://t.me/joinchat/IWzyHBGWCFwPQTe8Tm5H_Q?source=post_page---------------------------">Telegram</a>🔗</p><div id="2175" class="link-block"> <a href="https://readmedium.com/tech-diaries-neuralink-ready-to-test-the-brain-computer-interface-bci-a34f67c4bc64"> <div> <div> <h2>Tech Diaries: Neuralink ready to test the Brain-computer Interface (BCI)</h2> <div><h3>Chinese safe alternative to CRISPR, First Long-range solar-powered Car, Tiny Robots & Qudits</h3></div> <div><p>medium.com</p></div> </div> <div> <div style="background-image: url(https://miro.readmedium.com/v2/resize:fit:320/0*KxFnoW1-wVAg76Ye.jpg)"></div> </div> </div> </a> </div><div id="2e48" class="link-block"> <a href="https://readmedium.com/which-countries-are-most-at-risk-of-a-housing-bubble-154154efb18e"> <div> <div> <h2>Which Countries are most at risk of a Housing Bubble?</h2> <div><h3>Looking at the 4 key Housing Market Indicators in 22 developed Economies</h3></div> <div><p>medium.com</p></div> </div> <div> <div style="background-image: url(https://miro.readmedium.com/v2/resize:fit:320/0*3qt9vuOpnJURSV6v)"></div> </div> </div> </a> </div></article></body>

Visualizing the Rise in Bitcoin Hodlers & the waning correlation of Alt. coins with the Crypto kingpin

The Cryptoverse is always in a state of flux & a new dynamic emerges every now and then, which keeps this space interesting to follow & report. Although the digital assets have receded from their yearly highs seen a month ago, relative price stability in BTC as compared to the Alt. coins has gotten some pundits saying that bitcoin is beginning to act as storage of value. While it might be a little premature to draw that conclusion, a report by Coin Metrics on the State of the Network draws some useful insights from the recent price action in the digital assets.

For those of you, who are not aware of the term “hodl” — it originated as a drunken rant by a user in a bitcoin talk forum back in 2013 when the price of bitcoin ascended from under $15 in January to over $1100 in December of the same year. Sufficed to say he believed in holding the crypto asset for the long-term to reap the maximum rewards. The following years have seen a whole sect of traders emerged calling themselves as hodlers— simply put, they are invested for the long-term.

Figure 1 & Figure 2

The brief introduction of hodling was necessary to make sense of the first set of charts from the Coin Metrics report. The amount of Bitcoin supply that hasn’t been touched or actively traded for the past 5 years has reached an all-time high (Figure 1). To give you the exact figure — On July 19th, there were 3,847,859 BTC which had been sitting dormant in the prior 5 years.

Similarly, the percentage of BTC supply sitting passively has also grown to an all-time high of 21.6% (Figure 2), despite the fact that the actual supply of BTC has been consistently growing. The trend is clearly towards holding the premiere digital asset for the long-term. The report suggests that Bitcoin might be moving towards becoming more of a storage of value than a medium of exchange as hodlers rise to an all-time high.

Figure 3

The second chart compares the BTC untouched supply for the past six months, one year & two years to the actual price of bitcoin in US Dollars, shown on a log scale (Figure 3). Two trends emerge from this comparison as well. First, the price BTC supply mirrors the prices movements in the digital assets with the six months supply being the closest.

Second, and more importantly, is an inverse relationship between the BTC supply (hodlers) & the price movement. The supply peaks towards a price trough & vice versa. This resilience of hodlers to hold on to their BTC on every price correction has perhaps given it the price stability which we have seen recently. This relationship lays is the foundation stone of hodling.

And finally, we see the detached price movements of the Alt. coins from Bitcoin. Traditionally, the general crypto market has moved in the same direction as Bitcoin, posting identical gains or losses. These past few weeks, however, have seen a delinking of this relationship.

Bitcoin saw two identical peaks — one in late June (~$13,800) & another one in early July (~$13,000). Alt. coins, on the other hand, saw much smaller gains with every BTC bounce & much steeper declines with every BTC correction.

Figure 4

Keeping in mind the study period of this report, Bitcoin has remained relatively steady with a 2% decline with most of the Alt. coins posting double-digit losses (Figure 4) — EOS (-44%), Cosmos (-41%), Cardano (-37%), IOTA (-36%), Dash (-35%), Bitcoin Cash (-34%), Litecoin (-32%) and Ripple & NEO (both -31%) were notable among the decliners. The losses highlight how most digital assets have given up most of their gains recorded earlier this year.

Heightened geopolitical tensions, fear of a global economic slowdown in light of the trade wars & Facebook’s Libra coming under intense regulatory scrutiny have all contributed towards the recent weakness in general cryptos. Bitcoin has so far been able to hold its own with these headwinds since it is being increasingly seen as a store of value and hedge in uncertain times.

A strong correlation between Bitcoin & Gold right now is vouching for this fact as well. Also, Bitcoin seems to be the only digital assets with any kind regulatory clarity and mainstream adoption. The bigger question is perhaps… Will this last?