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Chainalysis Report Reveals Crypto Has Gone “Global” In 2021

The blockchain is an immutable record. Companies like Chainalysis make a living out of interpreting that data, extracting value and insights from the numbers. And on-chain analysis reveals that crypto is now “a truly global phenomenon.” The data comes from Chainalysis’ 2021 Global Crypto Adoption Index. The people that really need crypto, qualified as “emerging markets” in the paper, are increasingly involved in the space. Related Reading | Crypto Company Circle Seeks To Become Global Digital Currency Bank In The Weekly Update, our friends at Arcane Research found this to be the headline: “Chainalysis further ranked the countries with the highest crypto adoption following their methodology. A majority of the countries featuring at the top 20 list are emerging market economies.”  And clarifying their intention, Chainalysis’ paper itself starts with: “While the professional and institutional markets are crucial, we want to highlight the countries with the greatest cryptocurrency adoption by ordinary people, and focus on use cases related to transactions and individual saving, rather than trading and speculation.” That being said, we have to talk about… BTC price chart on Bitstamp | Source: BTC/USD on TradingView.com What Was Chainalysis ’ Methodology?  The company focused on “cryptocurrency adoption by ordinary people,” so they weighted everything by purchasing power parity per capita. They ranked “all 154 countries” according to three metrics: On-chain cryptocurrency value received, weighted by purchasing power parity (PPP) per capita. On-chain retail value transferred, weighted by PPP per capita. Peer-to-peer (P2P) exchange trade volume, weighted by PPP per capita and number of internet users. It’s worth clarifying that in that third one, they “rely on data supplied by two of the largest P2P platforms operating — LocalBitcoins and Paxful — to calculate each country’s P2P trade volume.” Because, for the most part, P2P trading isn’t reflexed on-chain. Chainalysis admits that “While this means that we aren’t capturing all P2P value, we believe these two exchanges are popular enough for their metrics to act as an overall approximation.” DeFi Is Not Part Of The Studio. DeFi Stats Coming Soon It’s also worth noting that, “Transactions carried out by DeFi protocol users all show up on-chain, as no centralized service ever takes custody of users’ assets.” That presented a problem, because it “skewed” their rankings “toward countries with comparatively more DeFi users.” So, Chainalysis decided to leave DeFi stats out of this particular studio. However, they promise. “We also decided to create a new DeFi Adoption Index, which will be available in the coming weeks.” Global Crypto Adoption Index 2021 | Source: Arcane Research Chainalysis Identified Three Key Trends On-chain analysis reveals that: Global cryptocurrency adoption is skyrocketing This might sound like an obvious claim, but the surprising thing is the staggering numbers.  “At the end of Q2 2020, following a period of little growth, total global adoption stood at 2.5 based on our summed up country index scores. At the end of Q2 2021, that total score stands at 24, suggesting that global adoption has grown by over 2300% since Q3 2019 and over 881% in the last year.” Adoption in emerging markets grows, powered by P2P platforms Not everyone has access to a globally accepted bank account. The people who don’t have access to centralized exchanges found a way to participate in the crypto space. And are doing it in a major way.  China and the U.S. dip in our rankings Not surprisingly, “analysis shows how far P2P volumes have fallen in the two countries compared to worldwide volumes.” However, according to Chainalysis, further considerations indicate that: “This activity may reflect increasing professionalization and institutionalization of cryptocurrency trading in the United States, and in China’s case may be related to ongoing government crackdowns on cryptocurrency trading.”  Why are Chinese people abandoning P2P trading so radically? Wouldn’t the “government crackdowns on cryptocurrency trading” cause a surge in old P2P trading instead? Related Reading | Chainalysis: 2020 Is The Year of The Institutional Bitcoin Investor In any case, Chainalysis concludes their study with: “The clear takeaway though is this: Cryptocurrency adoption has skyrocketed in the last twelve months, and the variation in the countries contributing to that show that cryptocurrency is a truly global phenomenon.” And we couldn’t agree more. It is. Global Crypto Adoption Index | Source: Chainalysis Featured Image by NASA on Unsplash – Charts by TradingView
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Fear And Greed: Sentiment Turns Neutral As Bitcoin Stagnates, What To Do?

It’s the calm before the storm. What to do when the Fear and Greed index turns grey? Warren Buffett already told us to be greedy when others are fearful. We already know that we should be fearful when others are greedy. What should we do when the market it’s at a rare state of balance and expectations are high? We should probably take a page for those Bitcoin maximalists and… wait for it… HODL! One of the main criticisms that the Fear and Greed Index gets is that it encourages traders and investors to try to time the market instead of holding strong. Bad things happen to those who try to time the market. Yet, we try to do it. The temptation is too strong. Bad things happen to those who trade emotionally. Yet, some fall for that trap over and over again. In fact, it could be argued that the Bitcoin and cryptocurrencies markets are even more emotional than the traditional ones. And that’s saying a lot.  In any case, before making any rash decisions, we should remember what we’re talking about here. The Fear & Greed Index goes into neutral territory | Source: Arcane Research What Exactly Is The Fear And Greed Index? We at NewsBTC deal with this constantly. Even though the Fear and Greed Index is a criticized and questionable indicator, there’s an undeniable connection to the market that’s obvious even to the casual observer. When we found a bizarre correlation between the Fear & Greed Index and UTXO data, we prefaced it with: “As a speculative asset, nothing else quite behaves like Bitcoin. Shifts in sentiment take price action to the extreme. As a result, tools have been developed to monitor the fear or greed in the market.” The website Alternative.me calculates the main Fear And Greed Index for cryptocurrency markets, they explain its reason to be as: The crypto market behaviour is very emotional. People tend to get greedy when the market is rising which results in FOMO (Fear of missing out). Also, people often sell their coins in irrational reaction of seeing red numbers. With our Fear and Greed Index, we try to save you from your own emotional overreactions. There are two simple assumptions: Extreme fear can be a sign that investors are too worried. That could be a buying opportunity. When Investors are getting too greedy, that means the market is due for a correction. We, very simply, explained why when we described how the Fear And Greed Index can be used as a trigger indicator: “Financial market sentiment can almost always be used as a contrarian indicator. But in a speculation driven industry where hype and buzz matter more than fundamentals, this is even more true.” BTC price chart on Bitstamp | Source: BTC/USD on TradingView.com What Does It Mean When The Sentiment Turns Neutral After what seemed like years of coldness and extreme fear, the market sentiment started improving as early as a week ago. And, even though it doesn’t feel that way, this advance into neutral territory is a huge improvement. As Arcane Research said in their “The Weekly Update” report: “The Fear & Greed Index has climbed rapidly since late July and touched neutral levels for the first time since May. Despite the slight decline in the last couple of days, the market is certainly getting more bullish. This bullishness is also evident in the futures market.” So, what should you do now that the sentiment turned neutral? Not much. Keep your finger on the trigger, though. Things are about to get interesting. Featured Image by Kristopher Roller on Unsplash – Charts by TradingView
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CBECI Report: China’s Hold Over Bitcoin Mining Was Waning Before The Crackdown

Shocker! According to the latest CBECI update, China’s control over Bitcoin mining was already waning. The Cambridge Bitcoin Electricity Consumption Index shows that and much more, it “provides an up-to-date estimate of the Bitcoin network’s daily electricity load.” However, China is the headline. The government’s recent ban on Bitcoin mining left the world speechless, and this feels like another piece to solve that puzzle.  It doesn’t quite fit, though. According to Arcane Research, CBECI numbers say that: China’s share of total Bitcoin mining power has declined from 75.5% in September 2019 to 46% in April 2021 — before the restrictions on Chinese miners were even imposed. That figure is much lower than the older estimate of 65%. Related Reading | Why China’s Crackdown On Bitcoin May Be Just Beginning That’s a sharp decline. Why did China’s miners lose so much ground before the ban? Did the Chinese government turn off the machines that they reportedly own? Why would they do that? Is everyone missing an obvious explanation for all of this? It’s also very interesting that the CBECI shows that the United States and Kazakhstan were growing at a tremendous rate before the ban. BTC price chart on Bitstamp | Source: BTC/USD on TradingView.com Bitcoin Mining In The United States And Kazakhstan  Arcane Research crunched the numbers, and apparently: Over the same period, the United States’ share of total Bitcoin hashrate increased from 4.1% to 16.8%, making it the second-largest Bitcoin mining location.  Following behind is Kazakhstan, with an almost six-fold increase of hashrate share — from a mere 1.4% in September 2019 to 8.2% in April 2021. That ‘s curious. After the government ban came into effect and the miners turned off their machines, we worried about the Bitcoin hash rate going into a death spiral. The great miner’s migration was on its way, and guess who were the forecasted big winners: Tons and tons of mining equipment are currently traveling to their new homes. There are reports of a huge operation in Kazhakstan, a neighboring nation of China. There are also rumors of equipment and personnel already settling down in Texas. The US state is making a push to become a Bitcoin mining capital, and apparently, the efforts already bore fruit.  Remember, though, everything the CBECI numbers show happened before the ban. Is there something we’re missing? Country share of global Bitcoin hash rate | Source: Arcane Research How Do They Get The CBECI Numbers? The Cambridge Bitcoin Electricity Consumption Index explains the methodology they use: The underlying techno-economic model is based on a bottom-up approach initially developed by Marc Bevand  in 2017 that uses the profitability threshold of different types of mining equipment as the starting point. Given that the exact electricity consumption cannot be determined, the CBECI provides a hypothetical range consisting of a hypothetical lower bound  (floor) and a hypothetical  upper bound  (ceiling) estimate. Within the boundaries of this range, a  best-guess  estimate is calculated to provide a more realistic figure that approximates Bitcoin’s real electricity consumption. So, it’s a very elaborate educated guess. However, it’s based on real data and a range of estimations. Does it tell us anything about the curious results they got? Is the data telling a story that we’re missing?  Related Reading | How China Bitcoin FUD Is Lowering The Cost To Produce BTC Last month, we posed a theory about the Chinese government trying to get rid of small hydroelectric plants. The whole situation is perplexing, so, we asked the following questions: It’s possible that the government is trying to get rid of those plants. That would explain the article’s tone, it seems like it was trying to get investors to stay away from those hydropower stations. In light of this, China’s ban on Bitcoin mining could just be part of an even bigger play. They’re serious and methodically shaking things up over there.  What could be their end-game? Is China just trying to go carbon neutral and repair the original flow of the rivers? Or is there something else at play here? Everything the CBECI shows seems to relate to the answer to all of these questions. However, there’s at least one piece missing. The mystery persists. Featured Image by Tuna Ölger from Pixabay – Charts by TradingView
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Bitcoin Supply Lights Up With Activity Due To Trading Range Boredom

This three-months-and-counting consolidation period Bitcoin is in has many investors with the finger on the trigger. Even though we’re in the middle of an Altseason of sorts, mainly caused by the lack of price fluctuation Bitcoin is exhibiting, the hunters seem to be ready. A recent Arcane Research report shows that, in the last year, […]
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