Traditionally, small investors have always been the target of the digital currency market, and large-grained investors have always followed in the footsteps of their emerging small-scale counterparts in the market, but is that changing? Over the past 15 years, high-tech products have undergone reverse changes, and consumption patterns have changed from enterprise-based to customer-based.
In the fourth quarter of 2017, small investors were at the forefront of the market, and as they entered the market, the media hype also pushed up prices. But these days, compared to those days, despite the heat of the digital currency market, there is no news of media hype and loud advertising of news agencies. In the first half of the fourth quarter of 2017, CNBC published nearly 100 news headlines about Bitcoin. But in the last six weeks, although Bitcoin has broken the historical ceiling of its market value, the network has dedicated less than 40 news headlines to Bitcoin. In the meantime, why are there no traces of day-to-day investors attached to Robin Hood? (Robin Hood’s work is a term that refers to emotionally changing prices in the market as a result of the irrational behavior of small investors).
It may not be easy in the digital currency market to draw a clear line between smallholder and corporate investors, and we can even say that the definition of this dichotomy is somewhat simplistic. However, we will continue to ask for help an essay From the CoinDesk website, let’s take a look at the different dimensions of the recent upward trend in the digital currency market to see how much investors’ behavior has changed over the years with what they showed in 2017.
1. Bitcoin whales, comparing trading with investing
The number of addresses with at least one bitcoin inventory has been increasing from the end of 2013 to 2018. In 2018, as the digital currency market collapsed, the number of addresses plummeted, but returned to growth in 2019 until it reached its previous levels in 2017 in the spring of this year. This is one of the differences between the recent rise of Bitcoin and its explosive growth in the last months of 2017, when the number of addresses reached its historical peak as the price of Bitcoin increased.
Now compare the number of addresses with at least one bitcoin inventory with the number of addresses with at least one bitcoin inventory; Addresses whose owners are known as whales in the market. In 2017, these whales sold their bitcoins at peak prices. But these days, it seems that whales are reluctant to auction off their bitcoins, and Forbes magazine’s list of bitcoin billionaires is getting longer by the day.
Of course, it is better to look at the availability of addresses with skepticism; Because not every address corresponds to an independent identity. Behavior is a better signal to investigate. But what are the goals of whales? They usually carry baskets full of bitcoins wherever they swim. Bitcoin also accumulates in the wallets of whales who buy and hold it, rather than in traders’ wallets.
From 2017 onwards, the occurrence of two declining trends in bitcoin accumulation by holders has been a forward-looking indicator for bitcoin. But in 2020, the bitcoin accumulation trend showed no signs of slowing down.
2- Comparing Bitcoin with Ether and other assets
Some believe that the emotional growth of initial coin offerings (ICOs) on the Ethereum platform has been one of the driving forces of the 2017 uptrend. However, by the time the initial supply fever reached its peak, ether had completed its uptrend. In the middle of the fourth quarter of 2017, the seasonal return of Bitcoin was 23% and the seasonal return of Ethereum was 6.9%. Therefore, it was the rapid growth of Bitcoin in the last days of 2017 that excited buyers.
The differences and similarities between the events of 2017 and the events of this year, speak for themselves. This year, as three years ago, Ether was the pioneer of the uptrend, but this time, unlike in the past, Bitcoin kept pace, to the point that its seasonal price increase in the fourth quarter of 2020 has reached 23.3% and bitcoin prices have risen. In the same period, it was equal to 28.4%. If the patterns of 2017 are repeated, it is unlikely that Bitcoin cows will take further steps to increase the price of this digital currency.
So is the digital currency market in a stabilization phase? The answer is both positive and negative. Bitcoin’s share of the digital currency market value is just under 60%. Typically, this percentage means that only a few coins make up the bulk of the market value, but this year the situation is changing.
The top five coins on the market are currently growing in line with bitcoins, but it seems that this rise is more gradual than in 2017.
3- Legal and informal futures markets (Off-Shore)
Those who believe in the influx of corporate investors into Bitcoin can talk about the growing market of the Chicago Mercantile Exchange (CME) as a sign of increasing demand for Bitcoin from corporate financial channels. The value of open (unsettled) contracts in the CME market reached a new record of $ 1 billion this week.
However, much of this growth is due to rising bitcoin prices. Overall, the number of legal derivatives contracts executed by individuals, sole proprietors and liquidity providers far exceeds the CME exchange figures. Therefore, it is not reasonable to consider the growth of enterprise sector investment as limited to the performance of the CME exchange. Perhaps it is better to say that the participation of organizational investors is growing at the same time as other market segments.
4- Comparing North American investors with East Asia
Along with the growth of CME exchange futures, an interesting event that should not be overlooked is the outflow of bitcoins from exchange offices located in East Asia to American exchange offices.
Examining the flow of exchanges, it can be seen that East Asian investors have recently sold their bitcoins at prices they have never done before. Today, compared to 2017, North Americans are more interested in investing in Bitcoin.
Overall, the evidence shows that the recent uptrend in the digital currency market is different from what we saw earlier in 2017, although this does not mean that we will not see another cycle of ups and downs. Signals from the presence of corporate players in the market indicate that we are probably already at the beginning of the same cycle that Bitcoin previously experienced in 2017. The history of bitcoin is replete with narratives that signal a fundamental change in the market outlook as a result of fundamental changes or legal changes. These narratives have filled the media space in an exaggerated way in the past, and we will probably see a similar thing these days. In addition, the same is true of the narratives that indicate the fall of the dollar.
Are traditional financial markets on the verge of collapse? Maybe yes, but that does not mean that Bitcoin can suddenly become a safe haven for people’s assets. Current patterns of entry of new and long-term investors indicate the growing interest in investing in Bitcoin, however, in the foreseeable future, Bitcoin and other digital currencies are still risky assets and should be treated with the same mindset.