Cryptocurrency capitalization has shown growth for the first time in a long time, the permanent leader has changed in the DeFi market, ICOs are constantly updating the anti-record: these and other events in the second quarter of 2020 are in the Bloomchain study.
Read or download Bloomchain Cryptocurrency Market Study Q2 2020
For the first time in several quarters, the cryptocurrency market showed growth: in the April to June period, its capitalization increased by 54 pp, reaching $259 billion. At the end of May, seven of the world’s ten largest cryptocurrencies showed growth, in June the situation turned out to be the opposite – eight of them ends up in the red zone.
Bitcoin remains the leader among the largest cryptocurrency assets. At the end of the first summer month, its share in market capitalization was practically unchanged, at 65%. Runner-up Ethereum has increased its share from 8.2% to 9.7%. The top 5 also includes Tether, XRP, and Bitcoin Cash.
There is only one change in the ten largest cryptocurrencies in the world – Tezos is out, replaced by Crypto.com Coin in mid-June. The token showed the highest monthly growth rate at the end of the quarter: in May it was 86%, in June – 44%. In general, at the beginning of July, the current price share of the maximum price of the world’s largest cryptocurrency averaged 21%.
Buy and hold
The choice of a buy and hold strategy when buying the five largest cryptocurrencies can generally benefit investors: by the end of the quarter, four of them were in the green. Most importantly, one can earn on Ethereum – every $100 invested from the beginning of April to the end of June generates a profit of $70.
Investments in bitcoin can also be profitable, investments in XRP and Bitcoin Cash showed near zero returns, the only asset that was not profitable at the end of the quarter was Bitcoin SV. The volatility of the top 5 cryptocurrencies during the reporting period fell by an average of 5.5 pp.
The average return on investment (ROI) across the top 5 cryptocurrencies turned out to be positive for the second straight quarter. In the April to June period, it was 22%, mainly due to the growth of bitcoin and Ethereum. According to the results of the previous quarter, the ROI was 24%, before that the indicator was red for half a year.
By the end of the first half of 2020, the volatility of bitcoin one-day returns had decreased significantly. The spread between the maximum and minimum prices of the world’s largest cryptocurrency ($10458 and $4107, respectively) is nearly 40% below 2019 levels.
The value of the Sharpe ratio for bitcoin turned out to be positive, as well as for two other traditional market benchmarks – oil and gold. Sharpe ratio shows the effectiveness of an investment asset. It is calculated as the ratio of the average risk premium to the average deviation of assets. At the end of the first half of 2020, this indicator for bitcoin was 2.42, higher than oil (0.46), but lower than gold (3.08).
Read also: Bitcoin and non-digital assets
The reporting period proved to be successful for both the cryptocurrency market and the traditional market. This is reflected in the correlation coefficient: 11 of the 12 traditional assets show a strong linear relationship with the largest cryptocurrencies (above 0.6).
There is no economic justification for such a relationship, so an incorrect correlation can be assumed. This is supported by evidence of a much lower correlation between bitcoin and traditional asset returns overnight. You can read more about the relationship between these indicators in our research.
On May 12, the daily earnings of miners fell sharply – almost 50% due to halving on the bitcoin network. In absolute terms, total revenue decreased from $15 million to $8 million per day. At the same time, the average commission for the quarter showed an increase from $0.75 to $1.80. The average commission share of the volume of one transaction is also doubled.
The share of miners’ commission income at the end of the II quarter of 2020 remained unchanged – it was 3% of their total remuneration, the amount of which for the reporting period amounted to about $ 2.5 billion.
Average commission per Ethereum transaction for the reporting period increased from $0.13 to $0.42. This sharp increase was due to several suspiciously high-fee transactions carried out on the Ethereum network from June 10 to 12. During this period, the average commission per transaction currently stands at nearly $4.
Read also: Ethereum Generous Commissions – Bug or Scam?
The number of wallets where the supply of bitcoin cash is stored increased slightly from 30.13 to 30.44 million. At the end of the quarter, the average number of active wallets was 873 thousand per month.
As before, around 70% of the value of digital assets goes to wallets with a balance of 10 to 10,000 BTC. The number of wallets of this size is 154 thousand, which is less than 1% of the total.
Since April, cryptocurrency exchange activity has increased: in the list of owners of the 100 largest wallets with BTC, the number has increased from 8 to 14 in three months. Four of them are owned by Binance, three by Coindesk, two by Kraken, one each by Huobi, Bitfinex, Bittrex, CoinCheck, and BITMEX. The largest wallet belongs to Huobi – at the time of publication of the material, its balance exceeds $ 2.38 billion.
As of early July, more than $1.81 billion had been blocked in decentralized financial markets (DeFi). Over the past three months, the leader has changed: instead of Maker, the application Compound, a decentralized lending platform based on Ethereum with support for the COMP stablecoin, has taken the top spot. His share was around 32%, while Maker’s share fell from 42% to 22% in three months.
Read also: the leader in the DeFi project market has changed
The largest share of funds in DeFi services fell on loans and loans – 72%. In three months, the share of derivatives increased (from 9% to 18%), the number of payments in smart contracts is still very small, still at the level of 1%.
ICOs and IEOs
The market for major offerings and exchanges is constantly updating anti-notes. at the end of the second quarter of 2020, only $59 million was raised through ICOs and IEOs, which is 26 pp less than the previous quarter.
At the same time, according to the results of the quarter, the share of funding through IEOs almost doubled in the second quarter – by 58%. The average ROI for IEO over the last 12 months was 65%, although in the previous quarter this indicator was negative and was -36%. When calculating the ROI of the maximum token fee per year, the average value will exceed 400%.