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Weekly Anchor Analysis October 16 (October 24); Review of market developments in the second and third quarters of 2021


Although the digital currency market was relatively stable in the second quarter of the year (April, May and June), it experienced a significant decline at certain intervals. The price trend of Bitcoin and other digital currencies was not very encouraging and after a pleasant period in the beginning of the year, it reached a relative recession.

Weekly Anchor Analysis October 16 (October 24);  Review of market developments in the second and third quarters of 2021
Digital currency price growth chart in the third quarter

Bitcoin and Ethereum were able to make up for the third period of the annual market cycle with their promising price growth, leaving the bear market behind in the second quarter and passing this cycle. Bitcoin with 32.55% and Ethereum with 43.82% increase in prices, once again recorded green candles in their price chart and marked a happy ending at the end of this cycle. In this article, with the help of Anchin Data Analysis website Quinometrics, We will examine the changes in the digital currency market in the third quarter (July, August and September) of the year.

Reviving the digital currency market

After Bitcoin and Ethereum, as the leaders in the digital currency market, gave the green light and confirmed the uptrend of the market, it was the turn of smart contract protocols to move forward and increase their prices to bring valuable profits to their lucky investors. . The Solana, Olench, and Terra protocols tripled during this period, experiencing a 300% price increase. Successful projects such as Polkadot, Cosmos, Algrand and Thezos have also increased in price by almost 90%.

The hot market for unique tokens (NFT) in recent months has flooded the Ethereum Blockchainchain ecosystem with an influx of enthusiasts. However, the high cost of transactions in this popular Blockchain still causes traders to be dissatisfied with the high cost of commissions. In the third quarter of 2021, Ethereum set a new record for transaction fees, with traders paying a total of $ 1.93 billion in transaction fees.

Ethereum’s competitors, meanwhile, seized the opportunity to attract investors. Solana and Olench blockchains took full advantage of the opportunity with greater scalability and lower transaction costs. As a result, Solana became a popular destination for traders fleeing Ethereum’s $ 55 fees during that time. Solana’s success in attracting micro-investors and the dynamism of the Blockchain The smart contract protocol set a new price peak, pushing the price of the native block of the Blockchain (SOL) above $ 200.

Weekly Anchor Analysis October 16 (October 24);  Review of market developments in the second and third quarters of 2021
SOL price chart compared to Ethereum transaction cost

On the other hand, the active community of the Ethereum blockchain did not join hands and tried to solve the problem of scalability of this blockchain. In the third quarter of 2021, several second-tier projects took steps to find a solution for Ethereum scalability. At the end of this quarter, the Arbitrum protocol was able to attract users and investors by launching its core network.

The Bitcoin Lightning Network also saw significant growth, showing that this leading digital currency will not lag behind the competition for second-tier solutions in its Blockchainchain. 3604 bitcoins are currently available on Lightning network open channels, which is a double increase compared to the second quarter of 2021. El Salvador’s move to accept and use Bitcoin as much as possible, as well as the addition of Bitcoin payments on its Twitter platform, were among the reasons that helped the network grow.

Bitcoin hit a record low of $ 29,800 in July after the Chinese government cracked down on digital currencies in May. After that, Chinese miners began migrating to resume operations in areas with more peaceful bitcoin mining laws. Due to the high volume of active miners in China and the fact that they have taken over much of their hash power, this shift has temporarily reduced bitcoin awareness to its lowest level since late 2019. But again, Bitcoin has started to rise since the beginning of July (July) and is now within the limits of its registered levels at the beginning of 2021.

Weekly Anchor Analysis October 16 (October 24);  Review of market developments in the second and third quarters of 2021
(Bitcoin awareness chart)

After the price peaks and the bull market that we saw this summer (2021), the market started a downward trend for a short time in September. As investors’ emotional sentiment improved, so did Ethereum’s futures market. On Tuesday, September 7, 2021 (September 16, 1400), a sudden drop in price caused more than $ 2 billion in assets of liquid investors and the market took a downward trend. But it was not long before the digital currency market was able to start the fourth quarter strong, with Bitcoin moving forward and retrieving the $ 50,000 range.

Weekly Anchor Analysis October 16 (October 24);  Review of market developments in the second and third quarters of 2021
(Bitcoin and Ethereum futures contracts chart)

Hot Summer Unprecedented Tokens (NFTs)

The unprecedented influx of investors into the attractive and booming market of unique tokens (NFTs) in the third quarter of 2021 was undoubtedly the headline of all news agencies. The impressive activity of the NFT market and the tremendous response to this fledgling field also surprised Vitalik Butrin, the founder of Ethereum. In the third quarter of 2021, a total of 9.88 million transfers were recorded for ERC-721 tokens, an increase of 305% over the previous quarter in the second quarter of the year.

Weekly Anchor Analysis October 16 (October 24);  Review of market developments in the second and third quarters of 2021
Transfer chart of ERC-721 tokens in quarterly periods

One of the trading centers and influential factors in the astonishing growth of the market was the OpenSea platform for trading unique tokens. After registering 194,000 NFT purchases in the first quarter and 357,000 in the second quarter, a total of 3.8 million purchases were made in the OpenSea market in the third quarter, an increase of 965% over the previous quarter. The number of unique daily buyers on the platform averaged 17,400 in the third quarter, up 815 percent from 1,900 registered buyers in the second quarter.

Weekly Anchor Analysis October 16 (October 24);  Review of market developments in the second and third quarters of 2021
(Number of daily and unique buyers on the OpenSea platform)

Signs of institutional investors’ interest in the attractive and popular NFT market can also be seen in this period. ArtBlocks and CryptoPunk were two projects that were able to experience tremendous investment in these three months. On July 30th, 104 units of the cheapest NFT on the cryptocurrency market called “The Floor” were sold by an unknown person or entity for $ 7 million. Also on August 23rd, the visa giant increased the average price of this NFT from $ 200,000 to $ 480,000 in one week by purchasing a cryptocurrency token. These two cases were just a hint of the attention of small and large organizations and investors to the NFT market this summer, which was mentioned.

Weekly Anchor Analysis October 16 (October 24);  Review of market developments in the second and third quarters of 2021
Graph of cryptocurrency average sales price and Google users search for NFTs

In addition to the evidence shown by in-line data on users’ desire to enter the NFT market, the amount of “NFT” searches in the Google search engine confirms the influx of a large number of users in the world of technology and cyberspace. According to available statistics, this volume of applications to join the NFT-loving Jirga in the third quarter of the year is three times more than the same period in late March and late April 2021 (late March 1399 / early April 1400). On the other hand, this can be a temporary and temporary emotion. The main reason for this is the high cost of transactions in the Ethereum Blockchain, which not everyone can afford. But the market remains to be hoped for, as Twitter launches a new feature to add NFTs to users’ personal profiles, trying to capitalize on the potential of its 206 million users to keep the community and its fans alive. So it is not far-fetched to be optimistic about the last quarter of the year for NFTs and see them continue to grow.

Ethereum unveiling of the EIP-1559 mechanism

Given the popularity of the Ethereum Blockchain and the density of users of this digital currency giant, the concern of high transaction costs and scalability challenges has always been a barrier for the lovers of this popular Blockchain. With the advent of the numerous NFTs and ecosystems active in the Blockchain, this need has been felt more and more among users, and the forced payment of exorbitant fees may discourage even pro-Ethereum fans. Therefore, on August 5, 2021 (August 14, 1400) Ethereum unveiled the EIP-1559 mechanism. Using this technology, the cost of ETH transactions is divided into two parts. One part of the commissions will be taken out of the cycle and burned, and the other part will be the share of the miners. During this process, a total of 406,000 ethers were burned in the third quarter of 2021, which is equivalent to $ 1.35 billion. Due to this new policy and the introduction of the EIP-1559 mechanism, the Ethereum market has undergone major changes that could affect the Blockchain in the future and lead to a positive trend.

Weekly Anchor Analysis October 16 (October 24);  Review of market developments in the second and third quarters of 2021
Graph of total burned ethers

Even at some point, the net supply of ether has decreased and has passed the inflation rate and negative net supply for 3 consecutive days.

Weekly Anchor Analysis October 16 (October 24);  Review of market developments in the second and third quarters of 2021
Daily net net supply chart

The average amount of ether production in the months before the launch of the EIP-1559 mechanism was $ 13,500 per day, which accounted for 4% of annual inflation. But since the launch of EIP-1559, the average daily supply rate has reached $ 6,400, which has reduced the annual inflation rate to 2%.

Conclusion

Knowing that the digital currency market is one of the most volatile and complex trading markets is the first step into this world. In this article, we have made a comparison between the second quarter of 2021 and the third quarter of this year, and it is good to know that this volume of changes and developments in the digital currency market can be seen on a much smaller scale. In order to be able to maintain your capital first and then think about increasing it, you need to look at the trading cycles and investment opportunities in this market from all angles.

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