MARKET

2019 Cryptocurrency Industry Semi-Annual Report

2019/8/22

This cryptocurrency research report analyzes the first half of this year, noting significant growth in the crypto sector despite regulatory challenges.

Table of Contents

The cryptocurrency analysis firm Coinshares and the stablecoin company Circle recently released a research report on the cryptocurrency industry over the past six months. Coinshares' H1 report pointed out that most assets have seen a significant rebound from last year's bear market. Among the significant growth in trading volume this year, the trading medium is still predominantly in U.S. dollars, followed by euros.

The research also indicates that the market's recovery is mainly driven by long-awaited entry of financial institutions rather than retail investors. Coinshares mentioned established financial institutions such as Fidelity and Intercontinental Exchange Bakkt in their report.

The report mentioned Facebook's Libra project and suggested that even though the currency is overly centralized, it may still be beneficial:

Although Libra is centralized, with no supply limit and not even a real cryptocurrency, it does provide value to those in the world without bank accounts, who cannot access services we take for granted, such as online shopping.

Grayscale buys 11,000 Bitcoins in April
Circle's Q2 report delves deeper, indicating signs of institutional entry from data on Grayscale's Bitcoin fund, as well as historical highs in open interest and volume in CME Group's bitcoin futures.

The research highlights that large institutions invested $85 million in Grayscale's Bitcoin fund alone, bringing the total assets under management to $2.7 billion. The report shows the continuous strength of Grayscale's funds since the market's low point at the end of 2018.

The asset under management grew 125% quarter-over-quarter. Institutional investor funds have been growing steadily, rising from 59% in Q3 2018 to the current 84%.

The surge in cryptocurrency futures volume at CME Group is seen by Circle as a result of increased interest from traditional financial institutions, with regulatory frameworks possibly moving towards transparency.

The report also notes the rising trend of Proof of Stake (POS) coins, with $6.5 billion worth of crypto assets locked in staking networks. The growth this year is driven by projects like Cosmos and V Systems.

The project with the highest annual return on staking is WAVES at 7.53%, while the highest market value EOS has a negative return of -0.34%.

Rise of Decentralized Finance and Platform Tokens
Following the decline of ICOs, a new trend observed by Circle is the rise of "platform tokens." Researchers state:

The sales model of platform tokens is similar to ICOs but limited to benefits on exchanges, such as trading fee discounts, rewards, governance systems, and token buybacks.

The chart lists the returns of various platform tokens, including Binance BNB, Huobi HT, Coinflex FLEX, and Bitfinex's LEO token.

The following chart compiles data on the growth of Decentralized Finance (DeFi) services. The report indicates that DAI still dominates the market share at 85.1%, while Circle's USDC and the peer-to-peer lending platform Compound have shown significant growth after May this year.

Excluding DAI from the statistics, the applications locking the most ETH are peer-to-peer lending platform Dharma, Compound, and decentralized exchange Uniswap.

Overall, both research reports show significant cryptocurrency activities and optimistic prospects, with stable growth across various data points. The current market atmosphere is beyond what investors at the market bottom last year could have imagined, as emphasized in the report that "nothing is certain in this field."

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