Cryptocurrency adoption has grown significantly over the past year, however, many other people may not yet fully perceive how varied this area is as an “asset class,” according to a new report from Chainalysis.
The team at Chainalysis, a leading blockchain analytics company, points out that the main virtual currency has its own exclusive pricing proposition or usage instances that drive its growth.
By employing blockchain or distributed ledger generation (DLT) analysis to track transaction patterns and analyze the key features of larger wallets containing virtual currencies, Chainalysis may be more informed about how those other instances of usage complement each other to offer “dynamics. “cryptographic ecosystem.
As for all cryptocurrencies from the first quarter of 2021, the following have the highest trading volumes (as shared in a Chainalysis report):
Together, those 4 broad lately make up the bulk of the volume of virtual currency transactions.
The knowledge indicates that Bitcoin remains primarily a “long-term investment,” Chainalysis shows while noting that it has tested in detail the types of wallets that contain BTC to crypto wallets that contain other types of assets.
The blockchain analytics company capable of separating virtual asset portfolios into the following categories:
As in the report:
“73% of Bitcoin is held through investors, compared to only 58% of Ethereum and 43% of the popular stablecoin USDT_ETH, which is an ERC-20 token edition of Tether. Meanwhile, only 7% of all Bitcoins are held through merchants. , which tend to seek short-term gains by trading across a wider variety of assets, compared to 18% for Ethereum and 14% for USDT_ETH.
The report also mentions that the use case of Bitcoin as a long-term investment becomes “even clearer when we delve into the average age ” of each currency, i. e. the time it has spent in its existing wallet. “findings, the knowledge is “amazing”.
The company shows that the average Bitcoin saved in a self-hosted wallet “acquired about 150 weeks ago, compared to 75 weeks for Ethereum and six to seven weeks for the popular solid currencies Tether and USDC. “In other words, cryptocurrency users have Bitcoin “approximately twice as much as Ethereum and more than 20 times more than in solidcoins. “
Chainalysis also asks “who exactly are those long-term Bitcoin investors?”The blockchain company notes that it characterizes institutional transfers as transfers “above US$1 million, professional transfers as transfers between $10,000 and $1 million, giant retail transfers as transfers between $1,000 and $10,000, and small retail transfers as transfers $1,000.
The knowledge shows that institutional investors likely accounted for 69% of “the entire volume of Bitcoin transactions of the era studied, based on the duration of individual transactions. “Taken together, the knowledge “greatly matches the narrative we have heard over the next year. : Investors, especially those from classical monetary institutions, have adopted Bitcoin as a long-term investment, and many position the asset as a hedge against inflation and other worrying economic trends,” the report revealed. why they see such a high percentage of Bitcoin retained “for long eras compared to other cryptocurrencies, and thus retained through investors whose giant transactions recommend that they be at the professional or institutional level. . . “
Chainalysis extra noted that as a reminder, despite its declining market capitalization and “less frequent” media coverage, Ethereum had “more transaction volume than Bitcoin in the first quarter of 2021. “
Chanalysis reveals:
“If we combine Ethereum’s transaction volume with that of wETH, its ERC-20 equivalent token, Ethereum would have by far the transaction volume of any cryptocurrency. “
The company also commented that since January 2020, most Ethereum transactions “have been related to at least one DeFi platform, and most of them occur between two DeFi platforms. “
As in the report:
“DeFi platforms are cryptocurrencies built on wise contract-enriched blockchains. Once built, they can function autonomously, acting for express monetary purposes (transactions, loans or other transactions) automatically when express situations are met, as explained below. via the code behind. , DeFi platforms can exist independently of a corporation or other governing body. “
It is noteworthy that almost all decentralized monetary platforms evolve on the Ethereum blockchain, which obviously means that they commonly conform to Ethereum as well as ERC-20 tokens.
ERC-20 tokens are exclusive virtual currencies that also evolved on the Ethereum blockchain, meaning those tokens can be transferred and earned from an Ethereum wallet. Many ERC-20 tokens evolve in particular to “reflect the value of existing assets,” Chainalysis explained. .
For example, Enveloped Bitcoin (wBTC) is an ERC-20 token that “matches the value of Bitcoin, while wETH plays the same service as Ethereum. “USDT_ETH and USDC_ETH “correspond to the value of the tether and USDC solid currencies respectively, which in turn, are tied to the US dollar,” the report notes.
Chainalysis also discussed in its report that deFi’s expansion is “a relatively recent development. “In June of last year, DeFi platforms “collectively earned between $2 billion and $3 billion in total weekly value. “This figure began “growing in August and is now steady above $20 billion according to the week of May 2021, infrequently exceeding $60 billion,” Chainalysis added.
The report noted that since the beginning of last year, DeFi is by far the “fastest-developing Array category powered almost all through Ethereum” and in this way Ethereum plays a key role in cryptographic innovation, as DeFi is a progression site for several new types of monetary tools and fixes that add NFT , decentralized exchanges and automated lending platforms.
He continued:
“DeFi has also given cryptocurrency a way to access the network to launch new platforms. The founders of classic, centralized exchanges and other facilities regularly raise capital themselves to build a new platform and supply it with their initial liquidity. borrow budget from users or other funders, who in turn download exclusive tokens related to the platform that entitle them to a percentage of the platform’s fees. We expect to see more inventions in DeFi in the coming years, the maximum of which will likely be maximum. be powered through Ethereum. “
The report also mentions that solid currencies are cryptos that are indexed to the value of existing “non-crypto assets. “The two most popular solid currencies, Tether and US Dollar Coin (USDC), have been pegged to the US dollar, which still serves as the world’s reserve currency.
The report further notes that solid currencies have “a higher volume of collective transactions than Bitcoin and Ethereum. “
As discussed in the report:
“Knowledge shows that most Tethers move between exchanges, especially crypto-crypto (C2C) exchanges, i. e. those that only allow users to exchange cryptocurrencies for other cryptocurrencies, and not for fiat currency. This reflects the role that solid coins play in regulating the industry in the industry, and in the specific C2C industry Thanks to their stability, well, solid coins allow industries to block the price of their cryptocurrency in US dollars, protecting themselves from the volatility of cryptocurrency without having to withdraw the budget from the exchanges.
The additional report explains that this role makes solid currencies “by far the maximum traded assets in the cryptocurrency ecosystem. “Chainalysis reminded users that maximum exchanges take place in the “closed gardens of individual exchanges. “
This means, in particular, that this commercial activity will not appear in the knowledge of the volume of the chain cited through Chainalysis. This knowledge is “rather recorded in the e-books of inventory bags orders”. The company explained that it can use the knowledge of the order eBook. “to compare the rate at which other cryptocurrencies are industrialized once they succeed on an exchange, a metric called industry intensity. “
As discussed in the Chainalysis report:
“Trading intensity measures the number of times a currency is traded between the time it is deposited and the time it is withdrawn. “
The report also noted that while industry intensity has “fluctuated and declined over time, solid currencies have far exceeded the industry’s intensity in peak months. “Chainalysis says it expects to see this “given the frequency with which industrialists exchange other cryptocurrencies for solid currencies in order to buy budget in a more solid asset”.
The corporation added that it is also aware of the fact that solid currencies are commonly used to conduct advertising transactions, especially in China and in spaces where Chinese investors do business with foreign entities.
As in the report:
“The popularity of Stablecoins for this purpose (commercial transactions) can be attributed in large part to its stability and usefulness as a replacement for the US dollar that can be used outdoors in the classical monetary system. “
As discussed in the report, blockchain research shows that “the history of cryptocurrency is more vital than any asset or investment strategy. “There are instances of “well-defined” usage for “the most vital and widely used cryptographic assets” and they are as follows:
Each asset plays a role in the larger crypto space, Chainalysis noted, adding that as this ecosystem continues to grow and evolve, new currencies “will likely appear to meet new use cases, and the usefulness of existing portions will also change. “