The nearly fivefold increase in the number of funds locked in DeFi had a huge impact on the entire cryptocurrency market. Commission fees on Ethereum have risen sharply, and the ICO segment has even increased slightly. These and other events in the 3rd quarter of 2020 are in Bloomchain research.
Read or download Bloomchain’s Q3 2020 Cryptocurrency Market Study.
The cryptocurrency market is showing growth for the second straight quarter. During the July to September period, its capitalization grew by 32%, reaching $342 billion. At the same time, the world’s nine largest cryptocurrencies grew at the end of August, and by the end of September, seven of them were in the red.
Bitcoin continues to maintain its lead among the largest cryptocurrency assets; however, during the reporting period, its share in market capitalization decreased from 65% to 58%. Stocks of other major cryptocurrencies increased: Ethereum – by 2.1%, Tether – by 0.9%. The polka-dot token entered the top 10 for the first time, capitalizing at the end of September of $3.68 billion.
The choice of a buy and hold strategy when buying the five largest cryptocurrencies (excluding Tether) can turn out to be profitable for investors: by the end of the quarter, everything was in the green. The most money can be made on Binance Coin – every $100 invested in early July generates a profit of $87 at the end of September.
The average return on investment (ROI) across the top 5 cryptocurrencies was positive, at 41% between July and September, mainly driven by the growth of Binance Coin and Ethereum.
At the end of the first three quarters of 2020, bitcoin’s one-day return volatility was lower than the indicator for the whole of 2019. The difference between the maximum and minimum prices of the world’s largest cryptocurrency ($12359 and $4107, respectively) turned out to be almost 20% lower.
The value of Sharpe’s ratio for bitcoin in the first nine months of the year turned out to be higher than one, in contrast to the market’s traditional benchmarks – oil and the S & P500 index. The Sharpe ratio is calculated as the ratio of the average risk premium to the average deviation of assets: conventionally, an investment is effective if the unit of risk accounts for more than one unit of return. For the first three quarters of 2020, this indicator for bitcoin is 1.09, for oil – 0.41, for the S & P500 – 0.30, for gold – 1.82.
The correlation between bitcoin one-day returns and traditional assets is close to zero (indicators for seven assets out of 11 range from -0.1 to 0.1), indicating that there is no relationship between bitcoin movements and traditional market benchmarks. However, the correlation between quotes of the same asset is significantly higher (the indicator for six of the 11 assets is more than 0.5).
There is no economic justification for such a relationship, so an incorrect correlation can be assumed. You can read more about the relationship between these indicators in our research.
The size of the average daily earnings of miners on the bitcoin network in the third quarter ranged from $7 to $12 million. These figures are similar to the results of the previous quarter, according to which the amount of earnings was almost halved due to Maybe half. At the same time, the average commission per transaction for the period July to September fell from $1.80 to $0.99.
The share of commission earnings of miners on the bitcoin network at the end of the third quarter of 2020 increased from 3% to 5% of their total remuneration, which amounted to nearly $3.5 billion for the reporting period. time, the same indicator on the Ethereum network is 28% at a time …
Amid the activity of the DeFi project, the average commission per transaction on Ethereum increased sharply during the reporting period – from $0.42 to $3.03. At the same time, in early September, this value rose to $ 14.
Read also: Ethereum Generous Commissions – Bug or Scam?
The number of wallets where the supply of bitcoin cash is stored increased from 30.44 to 31.99 million At the end of the quarter, the average number of active wallets also increased – from 873 to 980 thousand per month.
About 70% of the bitcoin value is still in wallets with balances from 10 to 10,000 BTC. The number of wallets of this size is almost 154 thousand, which is less than 1% of the total.
Over the past year, the share of bitcoin that has not moved for more than 10 years has increased to 9%, to 14% – from 2 to 3 years. Investors in general are more likely to choose to hold cryptocurrencies for a long time: only 37% of coins were moved during the year.
Between July and September, the number of largest BTC wallets owned by cryptocurrency exchanges fell from 14 to 12. Of these, four are Binance, two are Kraken, and one each is owned by Huobi, Coinbase, Bitfinex, Bittrex, CoinCheck, and BITEX. The largest wallet belongs to Huobi – at the time of publication of the material, its balance exceeds $2.58 billion.
At the end of September, the volume of funds blocked in decentralized financial markets (DeFi) amounted to $11.83 billion. Over the past three months, this figure has grown 461% at a time. The new market leader at the end of the quarter was decentralized exchange Uniswap with a blocked amount of $2.28 billion. The former leader, Maker, dropped to second place with $1.82 billion.
The largest share of funds in DeFi services goes to decentralized exchanges and loans – in total, accounts for 74% of the total market volume.
Read also: Credit Bubbles and Multiple Profits: What’s Happening in the DeFi Market
ICOs and IEOs
Among the projects that raised funds through ICOs and IEOs in Q3, more than a third also fell into the DeFi category: they accounted for 22% of the funds raised.
In total, during the reporting period, $310 million was raised through ICOs and IEOs, which is four times more than in the second quarter of 2020. Nevertheless, 2019-2020 still accounts for only about 15% of the funds that have been raised in this way since 2013 .